REG - Pharos Energy PLC - 2024 Preliminary Results
26/03/2025 07:16
For best results when printing this announcement, please click on link below:
https://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20250326:nRSZ2691Ca&default-theme=true
RNS Number : 2691C Pharos Energy PLC 26 March 2025
Pharos Energy plc
("Pharos" or the "Company" or, together with its subsidiaries, the "Group")
2024 Preliminary Results
A year of strong progress and momentum
Pharos Energy plc, an independent energy company with assets in Vietnam and
Egypt, announces its preliminary results for the year ended 31 December 2024.
An analyst presentation will take place at 12.30 GMT today by invitation only.
If you would like to register to attend, please contact Camarco at
pharosenergy@camarco.co.uk (mailto:pharosenergy@camarco.co.uk) .
Katherine Roe, Chief Executive Officer, commented:
"2024 was a year of strong progress and delivery for Pharos, culminating in
the approval for the extension of our producing licences in Vietnam. This
milestone has enabled Pharos to begin 2025 with renewed momentum and a focus
on growth.
"Operationally we delivered successful drilling results and maintained stable
production in Vietnam and Egypt delivering 5,801 boepd, generating consistent
cash flows, allowing us to fully repay the legacy debt and declare today a 10%
increase in the final dividend. We now have the benefit of an unlevered
balance sheet capable of supporting additional financing for growth alongside
our existing cash resources of $16.5 million at year end.
"The recent licence extensions in Vietnam are enabling us to move forward with
a work programme to fully unlock the significant resource potential within
these high quality assets. In Egypt, the signing of an MOU with EGPC for the
merger of our Egyptian concessions in February this year demonstrates the
alignment between all parties to conclude negotiations as soon as possible.
"Our disciplined approach to capital allocation continues to underpin our work
programme as we focus on projects that yield the highest returns for our
shareholders. We have recently submitted an application for a two-year
extension on Blocks 125 & 126 which will allow us to retain future
optionality for the prospect to be drilled, whilst investing in near term
production growth in Vietnam.
"Pharos is a cash generative, debt free business with a robust balance sheet.
This provides us with the flexibility and capacity to pursue both organic
growth and inorganic opportunities, specifically compelling accretive
acquisitions, to utilise our existing in-country track record and
relationships to drive scale, growth and continued shareholder returns.
"I would like to thank all of our colleagues and stakeholders for their
continued efforts and support and look forward to delivering in the year
ahead."
2024 Operational Highlights
· Group working interest 2024 production was 5,801 boepd net, in
line with guidance:
- Vietnam 4,361 boepd
- Egypt 1,440 bopd
· Successful drilling campaigns in both Vietnam and Egypt
· Strong safety record with no LTIs
· Vietnam:
- Applications for five-year licence extensions to the TGT and CNV
fields formally granted by the Vietnamese Government in December, increasing
year-end 2024 2P reserves in Vietnam by approximately 19% to 8.9 mmboe and
enabling further investment in both fields
- TGT: successful completion of two-well infill drilling programme
in October on time and under budget; we are pleased that both wells are now
producing in line with expectations
- Blocks 125 & 126: detailed drilling engineering studies for
the proposed well on Prospect A commenced in 3Q; orders placedfor long lead
items in August
· Egypt:
- El Fayum: successful drilling of second exploration commitment
well in September, encountering oil-bearing reservoirs in Abu Roach G
formation
- One El Fayum development well put on production in December
- North Beni Suef (NBS): ongoing processing of 3D seismic data
2024 Financial Highlights
· Group revenue of $136.1m (1,2) (2023: $168.1m (1,2))
· Cash generated from operations $89.3m (2023: $88.8m)
· Operating cash flow $54.0m (3) (2023: $44.9m)
· Cash operating costs (4) of $17.80/bbl (2023: $15.70/bbl)
· Cash balances as at 31 December 2024 of $16.5m (2023: $32.6m)
· Net cash (4) as at 31 December 2024 of $16.5m, the Group is debt
free (2023: $6.6m net debt (4,5))
· Profit for the year of $23.6m (2023: loss $48.8m), including
post-tax impairment reversals of $19.9m (2023: post-tax impairment losses of
$42.7m)
2024 Corporate Highlights
· Commitment to shareholder returns continue:
- Sustainable dividend policy delivered with an interim dividend
of 0.363 pence per share for the 2024 financial year, and proposed final
dividend of 0.847 pence per share announced today, subject to shareholder
approval at 2025 AGM
- Share buyback programme concluded in January 2025 following full
utilisation of the latest $3.0m committed to the programme. Since its
initiation in July 2022, 30,708,855 ordinary shares have been repurchased by
the Company at an average price paid of 23.65p per share
2025 Outlook and Highlights
· Group working interest production guidance of 5,000 - 6,200 boepd
net:
- Vietnam 3,600 - 4,600 boepd
- Egypt 1,400 - 1,600 bopd
· Vietnam production; following the approval of the TGT and CNV
five-year licence extensions:
- TGT: Drilling of an appraisal commitment well in 4Q; appraisal
success would open up an undrilled area in the field
- TGT: Three infill wells drilling programme expected to commence
in 4Q
- CNV: Planning underway for the drilling of one infill well
expected to commence in 4Q
- 3D seismic reprocessing on both assets commenced in January
2025, expected completion in 3Q
· Vietnam exploration; Blocks 125 & 126:
- Submitted application for a 2-Year PSC Exploration Phase
Extension in February 2025
- Long Lead Items for Block 125 exploration well expected to
arrive in 2Q 2025
- Renewed focus on farm-out strategy to enable drilling of the
prospect
· Egypt:
- El Fayum: Testing of the successful exploration commitment well
in February
- Application for commercial discovery declaration submitted to
EGPC in 1Q
- Planning underway to commence two-well El Fayum drilling
programme in 2H
- NBS: expected completion of 3D seismic data processing in 1H,
with interpretation and mapping to follow
- Memorandum of Understanding (MOU) with EGPC in relation to the
proposed consolidation of the El Fayum and NBS concessions signed in February
2025
· On track to achieve our Net Zero interim three-year target
(2024-2026) of 5% emissions reduction
· Forecast Group cash capex in the year expected to be a minimum of
$37m and could potentially increase to $66m. The minimum programme reflects
the drilling of one TGT appraisal commitment well and long lead items for TGT
and CNV infill wells. The upper range would include drilling the three TGT
infill wells, one CNV appraisal commitment well, and one CNV infill well. The
minimum range includes long lead items for Block 125 exploration drilling in
Vietnam. In Egypt, the minimum programme includes two El Fayum development
wells and two injector wells, with the potential for three additional
development wells on El Fayum and two development wells and one water injector
in NBS in our upper range, should activity increase following approval and
signature of a consolidated concession agreement
· Active capital programme aimed at delivering important production
growth from 2026
(1) Egyptian revenues are stated post government take
(2) Stated prior to realised hedging loss of $0.1m (2023: loss of $0.2m)
(3) Operating cash flow = Net cash from operating activities, as set out in
the Cash Flow Statement
(4) See Non-IFRS measures on page 40
5 Includes RBL and National Bank of Egypt working capital drawdown
Enquiries
Pharos Energy plc
Tel: 020 7747 2000
Katherine Roe, Chief Executive Officer
Sue Rivett, Chief Financial Officer
Camarco
Tel: 020 3757 4980
Billy Clegg | Georgia Edmonds | Violet Wilson | Tamsin Howard
Notes to editors
Pharos Energy plc is an independent energy company with a focus on sustainable
growth and returns to stakeholders, which is listed on the London Stock
Exchange. Pharos has production, development and/or exploration interests in
Egypt and Vietnam. In Egypt, Pharos holds a 45% working interest share in the
El Fayum Concession in the Western Desert, with IPR Lake Qarun, part of the
international integrated energy business IPR Energy Group, holding the
remaining 55% working interest. The El Fayum Concession produces oil from 10
fields and is located 80 km southwest of Cairo. It is operated by Petrosilah,
a 50/50 joint stock company between the contractor parties (being IPR Lake
Qarun and Pharos) and the Egyptian General Petroleum Corporation (EGPC).
Pharos also holds a 45% working interest share in the North Beni Suef (NBS)
Concession in Egypt, which is located immediately south of the El Fayum
Concession. The first development lease on the NBS Concession was awarded in
September 2023 and production started in December 2023. IPR Lake Qarun
operates and holds the remaining 55% working interest in the NBS Concession.
In Vietnam, Pharos currently 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 currently has a 25% working interest in the Ca Ngu Vang
(CNV) field located in Block 9-2, which is operated by the Hoan Vu Joint
Operating Company. Following the announcement by Pharos in December 2024 of
approval a five year extension to the terms of the petroleum contracts for
Blocks 16-1 and 9-2, together with associated changes to fiscal terms and
participating interests, Pharos will hold a revised working interest in Block
16-1 (TGT) of 25.33% with effect from 8 December 2026 and a revised working
interest in Block 9-2 (CNV) of 20% with effect from 16 December 2027. 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.
Chair's Statement
Strengthened foundation for future growth
For Pharos, 2024 has been a year of significant progress, during which we have
enhanced our core business with the licence extensions in Vietnam, achieved
financial resilience with the repayment in full of the company's debt and
strengthened our leadership team, laying the foundation for the next stage of
growth.
Throughout the portfolio, the team's focus on operational delivery was
evidenced by good drilling performance both in Vietnam, with the two TGT wells
contributing to production, and in Egypt, with exploration success on the El
Fayum commitment well. Most notably, the Vietnam JOCs' application for the
five-year licence extensions to the TGT and CNV fields was granted by the
Vietnamese Government in December, an important catalyst to enable further
investment in both fields. We have continued to build on a culture of capital
discipline to transform the Group's balance sheet, having fully paid off all
outstanding debt in September and leaving the Company debt-free. Alongside
this, the improving macro environment in Egypt has seen our receivables
position improve with over $25m received during the year. This performance has
allowed the Board to announce today the intention to pay a final dividend of
0.847pence per share for the 2024 financial year, taking the 2024 full year
dividend to 1.210 pence, a continuation of our commitment to sustainable
shareholder returns.
These achievements are a testament to the hard work, dedication, and
commitment of the entire Pharos team. I would like to congratulate all of my
colleagues on a year of good performance which has positioned Pharos for a
positive future with strong operational momentum, a robust capital structure,
and excellent growth opportunities.
Board governance and leadership changes
Over the past few years, the Board has undergone significant changes to
strengthen Board independence and maintain a high standard of governance. We
invest in regular Board training and evaluations to address any skills gaps
and ensure the Board has the right balance of relevant skills and expertise to
guide the Company through its next phase of growth.
I am delighted that Katherine Roe joined the Pharos Board as its new Chief
Executive Officer in July 2024 following Jann Brown's retirement from the
Board in April. Katherine's 20 years of senior corporate, industry and capital
markets experience across several international jurisdictions will be of great
value to us as she leads Pharos into our next strategic stage. Since joining
the Company in July, Katherine has already forged strong relationships with
key stakeholders in both jurisdictions, successfully securing the five-year
licence extensions to TGT and CNV in Vietnam in December 2024, and the signing
of the MOU with IPR and EGPC for the consolidation of our Egyptian assets in
February 2025. It is also important to recognise Jann's contribution
throughout her tenure as CEO during challenging times, establishing the
platform for much of the recent progress across the business. I would like to
thank Jann for her years of service to Pharos and wish her well in her
retirement.
Another significant change the Company made was the appointment of Bill Higgs
as Independent Non-Executive Director in January 2024 and subsequently as
Chair of the Company's new Reserves Committee, an important addition to our
governance framework as his technical expertise will be crucial to assess and
advise on growth opportunities in our portfolio.
With the changes in 2024, the Board is refreshed, resilient, and strong. We
will continue to evaluate opportunities to strengthen our capabilities at
Board and senior management level with a view to ensuring we are
well-positioned for future success.
A diverse and inclusive culture
At Pharos, we recognise that a positive and inclusive company culture is
essential to our long-term success. We are proud of our small yet diverse
global workforce, whose broad range of backgrounds, ethnicities, skills and
experience help strengthen the Company for the future. As at year end, I am
pleased to report that the Company had three female Directors, representing
50% of the Board. Most notably, our global team comprised 10 different
nationalities, of which women account for c.51%.
The Board and senior management team are dedicated to creating a safe
workplace for all, in which people are confident to engage and contribute.
During the year, as Non-Executive Chair of the Board and designated
Non-Executive Director responsible for workforce engagement, I carried out
various in-person town hall meetings, during which staff were invited to share
their feedback and views about the Company without the presence of any
Executive Directors to provide an open, honest and safe space for all
employees to express any concerns they might have. I am pleased to report that
staff morale remains high, and we have seen a significant strengthening of our
company culture post COVID-19 lockdowns. We operate in a global industry, and
we are careful to ensure that we continue to foster an environment that is
safe, inclusive and collaborative in order to benefit from the diverse
perspectives that our people bring.
Ongoing dialogues with stakeholders
Pharos' operational success and long-standing partnerships, spanning over 25
years, are built on a culture of transparency and integrity. The senior
management team and I have maintained regular and proactive dialogues with
local governments, joint-operating partners, and shareholders. In addition to
the annual Strategy Day, where the Board focuses on where and how we can best
offer value to our stakeholders, we also held regular ad-hoc discussions with
corporate advisers and commercial experts in 2024 to stay well-informed about
shareholder interests and industry challenges as the Company develops,
reviews, refines and executes its long-term strategic plan.
The Board recognises the importance of scale. While Pharos has consistently
delivered strong results as an independent small-cap energy producer, we
understand that increasing our scale will allow us to create more long-term
value for shareholders and compete more effectively in the E&P market. The
Board remains committed to delivering returns for shareholders, including
potential organic and inorganic opportunities that will enhance our portfolio
and strengthen the Company's position in the sector. In doing so, the Board
and senior management team will continue to engage with our stakeholders in a
personal and meaningful way. We are grateful to our shareholders whose support
during times of uncertainty has been crucial to our growth and transformation
throughout the years.
Making a positive difference
As Pharos explores these strategic opportunities, we also recognise the need
for more balanced energy systems worldwide, delivering energy sources that
have a lower climate impact and are reliable and affordable for developed and
emerging nations alike. The importance of energy and climate security
continues to be a key issue for global governments, and I firmly believe that
responsible production and development of oil and gas resources, especially in
economies transitioning from heavy reliance on coal, can be a major driver for
economic development and alleviating energy poverty. Our host governments
understand and appreciate Pharos' in-country impact that goes beyond national
revenues from oil and gas production, and we appreciate our host nations'
trust in us and the long-term role that we play in their countries' energy
transition.
As the global energy landscape continues to evolve, sustainability remains at
the heart of our business. In 2024, we progressed our net zero strategy by
updating our 2023 Net Zero Roadmap to outline the steps we have taken to
reduce our carbon footprint and contribute to a more sustainable future. We
are on track to achieve our 2026 interim emissions reduction target and remain
committed to transparency in our sustainability reporting.
We are proud of our social and community initiatives, which have been an
important part of the Company's philosophy throughout its history. In 2024, in
addition to a training levy of $500,000 that goes into a ring-fenced fund to
support the development of industry talents in Vietnam and Egypt, we also
supported a record 26 community investment projects across Egypt, Vietnam, and
the UK, investing a total of $259,889 in education, training, healthcare and
infrastructure in our local communities. Pharos is committed to deploying our
expertise and capital to partner with host governments to develop local
capacity, enhance energy security and unlock value from our host nations'
natural resources in an environmentally sustainable and socially responsible
manner.
Looking ahead
In addition to seeing a number of important organisational changes at Board
and senior management level, 2024 was a year of delivery for Pharos. The
Company continued to deliver on its strategy, strengthened its financial
health, and built on its track record of sustainable shareholder returns. As
Chair of the Board, I would like to thank my fellow Board members, senior
management and the Pharos team as a whole for their hard work, commitment, and
dedication throughout the year. Their expertise and support have been vital in
driving Pharos forward and delivering long-term sustainable value for all
shareholders. I am also grateful to our host nations and communities for their
continued trust, our shareholders for their confidence, and our partners,
suppliers and advisers for their support.
Pharos has a leadership team that brings deep technical experience and strong
financial discipline, a clear strategy, a focused portfolio that is unique
within our sector, and a commitment to delivering value. We have the right
combination to execute the right growth opportunities at the right time, and
the Board looks to the future with great confidence in our ability to deliver
growth and value in 2025 and beyond.
John Martin
Non-Executive Chair
Chief Executive Officer's Statement
Maximising the value of our high quality portfolio
2024 has been a year of delivery for Pharos Energy. Amidst the challenging
global environment and ongoing volatilities facing the industry, Pharos
delivered crucial milestones that allowed us to emerge operationally stronger
and financially robust. In my first Annual Report statement as Chief Executive
Officer of Pharos Energy, I am proud to report a strong performance throughout
2024, with a solid operational business, high-quality assets delivering stable
production and robust cash flows, an impressive and dedicated team, and a
robust financial base.
Financial strength
Strengthening our balance sheet has been a pivotal achievement for Pharos in
2024. We were proud to report our Company moving to a debt-free position in
September with the full repayment of all outstanding legacy debt since 2019.
We ended the year in a strong financial position with cash balances of $16.5m
and revenues of $136.1m. Alongside this, the improving macroeconomic
environment in Egypt, coupled with our careful cost control, has seen our
receivables position improve, with year-end 2024 balance down 21% to $29.5m
and over $25m received from EGPC during the year. The continued progress of
regular receivable payments will determine the pace of our future investment
in country. We benefit from having quality assets with catalysts to extract
further value and we look forward to continuing to invest in our portfolio
within the framework of a strict and transparent capital allocation policy.
At Pharos, we have a firm commitment to deliver returns to shareholders. Our
established dividend programme is at the heart of our business model, and it
is through this lens that we assess all capital allocation goals. With a
stronger balance sheet compared to the same time last year and disciplined
fiscal management, we continue our track record of delivering sustainable
shareholder returns in 2024, totalling $8.8m this year through a combination
of dividend payments and share buybacks.
Today, the Board have recommended a final dividend for the 2024 financial year
of 0.847 pence per share which, subject to shareholders' approval at the
Company's 2025 AGM, would take the 2024 full year dividend to 1.210 pence per
share. Dividends continue to be a fundamental part of the Company's investment
proposition, and we are committed to striking the right balance between
tangible shareholder returns with investment in our assets to generate growth
whilst preserving the financial health of the business.
Operational momentum across the portfolio
The Company had an operationally busy year in 2024. Our healthy balance sheet
allowed us to support active drilling work programmes during the year, with
campaigns in both Vietnam and Egypt successfully completed in the second half.
We are proud to have delivered solid production results on time, on budget, in
line with guidance, and with zero LTIs across the Group.
In Vietnam, the Group continued to deliver stable production rates, robust
operations, and high netback. At the TGT field, a two infill well drilling
programme was completed in October, with both wells producing in line with
expectations. At the CNV field, two infill wells were agreed by all partners
in 1H. Overall production from Vietnam was further supported by well
interventions and production optimisation activities throughout the year. Most
notably, in December, the HLHVJOCs' applications for five-year licence
extensions to both the TGT and CNV fields were granted by the Vietnamese
Government, extending the licence for the TGT field to 7 December 2031, and
CNV field to 15 December 2032. The granting of the licence extensions is a
significant achievement for the Company, immediately increasing our year-end
2024 2P reserves in Vietnam by approximately 19% and allowing us to prioritise
future investments to unlock untapped potential in both fields.
In Egypt, the Group maintains a measured approach to funding allocation for
capital expenditure. Production throughout the year was stable due to a strong
focus on workovers, recompletions, and water injection to bring low-cost
barrels to production and build reservoir energy for future drilling. On El
Fayum, drilling of the second exploration commitment well successfully
completed in September after encountering oil-bearing reservoirs in the Abu
Roach G formation. Additionally, one El Fayum development well was put on
production in December. On North Beni Suef, the processing of 3D seismic data
continued, with interpretation and mapping to follow in 2025.
We are committed to operating safely and responsibly at all times. We are
proud to have maintained our excellent safety record during an operationally
active year like 2024. In particular, in Vietnam, we have maintained this
record since 1997 thanks to the JOCs' consistent efforts to provide and
champion workers' health, safety, and well-being; an achievement of which we
are proud. The health and safety of our workforce remains our highest
priority, and we are careful to maintain this going forward.
Well-positioned to develop growth opportunities
Our operational momentum in 2024 has laid a solid foundation for Pharos to
further develop growth opportunities in our portfolio, with options
continuously being explored and development work progressed to maximise the
potential of each asset.
In Vietnam, our exploration blocks, Blocks 125 & 126, have significant
potential to unlock material organic value. We are active in our discussions
to source a partner to support the funding of a commitment well on Block 125.
To preserve our ability to drill in 2025, we ordered Long Lead Items (LLIs) in
August 2024, demonstrating our commitment to progressing this opportunity. We
have recently submitted an application for a two-year extension on Blocks 125
& 126 which will allow us to retain future optionality for the prospect to
be drilled, whilst investing in near term production growth in Vietnam.
In Egypt, we have further upside in El Fayum and North Beni Suef, demonstrated
by the successes in both concessions in 2023 and 2024. The recent signing of a
Memorandum of Understanding (MOU) with IPR and EGPC in February 2025 was a key
catalyst in the project seeking to consolidate our two existing concessions.
The negotiations, once concluded, are expected to result in a new consolidated
Concession Agreement for both assets with improved fiscal terms, an extension
of the current term of the concessions and further work programmes aimed at
increasing production from the areas. This consolidation is expected to add
significant value to our low-cost Egyptian asset base and deliver future
growth. We will continue to work closely with all parties and use our best
efforts to complete negotiations as soon as possible, with a view to the new
agreement receiving government and parliament approval and then being signed
by all parties at the earliest opportunity.
Positive partnerships for mutual success
Since joining as CEO in July 2024, I have been greatly encouraged by the open
and receptive dialogues we had with key stakeholders. During the year, I met
with our regulators, government representatives and JOC partners in both
Vietnam and Egypt, including EGPC, IPR, the Egyptian Minister of Petroleum and
Natural Resources, PetroVietnam (PVN), and the HLHVJOCs. Their ongoing support
has been instrumental in delivering some of our key strategic objectives in
2024, such as the TGT and CNV licence extensions in Vietnam and the signature
of the consolidation MOU in Egypt, and underscored the constructive
relationship and recognition of our long-term commitment to the regions from
our host governments and joint operating partners.
Our positive relationships in both jurisdictions will continue to support our
strategy and provide a competitive edge as we seek to unlock further value
from these assets. As we maintain a firm handle on our existing portfolio, we
also look for inorganic opportunities that can generate additional value for
our shareholders, align with our long-term strategy, and leverage our existing
long-standing in-country presence and partnerships. We have an experienced and
highly dedicated team with strong industry relations to assess these
opportunities in a disciplined and systematic manner. Underpinned by a
debt-free balance sheet and steady production base, we are confident in our
ability to build on our existing portfolio to create further sustainable,
value-accretive growth for all our shareholders.
As Pharos explores these opportunities, we remain focused on the role we play
in the socio-economic development of our host countries. We believe that oil
and gas companies like Pharos, with our commitment to producing safely and
responsibly, a wealth of industry expertise, and a healthy financial base,
will continue to play an important part in the energy transition, especially
in emerging economies like Vietnam and Egypt. In our discussions with our host
governments, we note their recognition of the importance of our operations and
investments to support their broader energy security agenda and prosperity.
This is exactly what we have done in 2024, having committed to the domestic
sale of 100% of oil and gas produced from our assets in both Egypt and Vietnam
during the year. We also progressed our net zero strategy in 2024 by updating
our 2023 Net Zero Roadmap to outline the steps we have taken since its
original publication to reduce our carbon footprint and contribute to a more
sustainable future. More details of our updated Roadmap will be set out in our
2024 Annual Report & Accounts.
Outlook
Pharos has made significant strides in 2024, having delivered a stabilised
asset base set for growth, a solid financial performance, well-protected cash
flows, and an exciting mix of opportunities to pursue in 2025 and beyond. In
Vietnam, planning is underway for the drilling of a TGT commitment well in 4Q
2025, the success of which could open up an undrilled area in the field. We
also have additional infill drilling programmes in both TGT and CNV. We have
recently submitted a two-year extension on Blocks 125 & 126 which will
allow us to retain future optionality for the prospect to be drilled, whilst
investing in near term production growth in Vietnam. In parallel, we continue
active farm-out discussions with potential partners recognising the risk-
reward balance of our portfolio. In Egypt, a two-well drilling programme in El
Fayum will commence in 2H 2025 and, in parallel, discussions will continue on
the consolidated Concession Agreement.
With capital discipline at our core, a clear set of strategic objectives, a
portfolio of assets with catalysts, a strong financial position, a dedicated
and diverse workforce, and a committed leadership team, the Company is
well-positioned to deliver long-term sustainable value for all stakeholders.
We have a stronger than ever foundation from which to build on and move
forward to grow value in both Vietnam and Egypt.
I would like to take this opportunity to thank all of our employees, partners,
and shareholders for their continued dedication and support. Looking ahead, I
am confident in our ability to execute our strategy and look forward to
steering Pharos on a path towards a new phase of growth and success.
Katherine Roe
Chief Executive Officer
Operational Review
Operations
The Group's working interest 2024 production was 5,801 boepd net, in line with
the Group's production guidance of 5,200 to 6,500 boepd.
Vietnam
Vietnam Production
Production in 2024 from the TGT and CNV fields net to the Group's working
interest averaged 4,361 boepd. This is in line with the 2024 production
guidance for Vietnam of 3,900 - 5,000 boepd net.
TGT production averaged 10,968 boepd gross and 3,254 boepd net to the Group.
CNV production averaged 4,426 boepd gross and 1,107 boepd net to the Group.
Vietnam Development and Operations
TGT & CNV Fields
On Block 16-1 - TGT Field, operational activities in the first half of 2024
focused on adding low-cost production through well interventions and
production optimisation opportunities. The second half of the year saw
successful completion of the two-well infill drilling programme from October
on time and under budget. Both wells are contributing to production.
On 20 December 2024, the applications for our five-year licence extensions to
the TGT and CNV fields were granted by the Vietnamese Government. The
extensions resulted in an increase to the TGT and CNV 2024 year-end 2P
reserves of approximately 19%, with potential to further increase reserves
through appraisal success and infill wells. As one of the conditions of the
licence extensions, the working interest of the foreign contractor parties
will reduce with effect from the start of the five year extension period under
each petroleum contract, being December 2026 for TGT (Block 16-1) and December
2027 for CNV (Block 9-2)). The Group's working interest for TGT will change
from 30.5% to 25.3% and its working interest in CNV will change from 25% to
20%. The extensions are accompanied by an agreed work programme commitment of
3D seismic reprocessing and one appraisal well on each field. Certain other
licence terms have been revised to be consistent with precedent extensions
granted to other operators by the Vietnamese Government and are in line with
the current Vietnamese Petroleum Law.
Vietnam Exploration
Blocks 125 & 126
On Blocks 125 & 126, discussions with potential farm-in parties and
drilling contractors are ongoing. In 2024, the Company continued to optimise
its prospects and leads portfolio, and progress options to secure a drilling
slot in Block 125. Detailed drilling engineering studies for the well on
Prospect A commenced in 3Q 2024. To preserve our ability to drill, we have
ordered Long Lead Items (LLIs) in August 2024 for delivery during 2025. In
February 2025, we also submitted an application for a two-year PSC exploration
phase extension to the relevant authorities, underscoring our commitment to
pursuing this exciting opportunity.
2025 Vietnam Work Programme
TGT & CNV Fields
· Vietnam production guidance for 2025 is 3,600 - 4,600 boepd net
· Following the approval of the TGT and CNV five-year licence
extensions:
o TGT: Drilling of an appraisal commitment well in 4Q; appraisal success
would open up an undrilled area in the field
o TGT: Three TGT infill wells drilling programme expected to commence in 4Q
o CNV: Planning underway for the drilling of one infill well expected to
commence in 4Q
o 3D seismic reprocessing on both assets commenced in January 2025, expected
completion in 3Q 2025
Blocks 125 & 126
· Submitted application for a 2-Year PSC Exploration Phase
Extension in February 2025
· Long Lead Items for Block 125 exploration well expected to arrive
in 2Q 2025
· Renewed focus on farm-out strategy to enable drilling of the
prospect
Egypt
Egypt Production
Production in 2024 from the El Fayum and NBS concessions net to the Group's
working interest averaged 1,440 bopd. This is in line with the 2024 production
guidance for Egypt of 1,300 - 1,500 bopd net.
El Fayum production averaged 2,978 bopd gross and 1,340 bopd net to the Group.
NBS production averaged 223 bopd gross and 100 bopd net to the Group.
Egypt Development and Operations
El Fayum
One development well was put on production in 2024.
North Beni Suef (NBS)
The NBS-SW1X well, which was declared a commercial discovery and put on
production in December 2023, continued to contribute to total production in
2024.
Egypt Exploration
El Fayum exploration
In 2024, we had continued exploration success with a second exploration
commitment well in September encountering oil-bearing reservoirs in the Abu
Roach G formation.
North Beni Suef exploration
On NBS, all technical commitments of the initial exploration period have been
fulfilled with 3D seismic survey acquired on time and on budget. The
processing of 3D seismic data is ongoing, with data interpretation and mapping
to follow.
Egypt Commercial
IPR and Pharos El Fayum (PEF), in their capacity as the Contractor parties
under the El Fayum and NBS Concession Agreements, submitted a request to EGPC
to merge the two assets and replace them with a new consolidated Concession
Agreement. The consolidated Concession Agreement is expected to unlock
significant value in the Western Desert by improving certain fiscal terms,
extending the term of the concessions and committing the Contractor parties to
additional work programmes aimed at increasing production from the areas.
In February 2025, the Company announced that PEF had entered into a
non-binding Memorandum of Understanding (MOU) with IPR and EGPC in relation to
the proposed consolidation of the two Concession Agreements. The signing of
the MOU is a key milestone in the process. Under the MOU, EGPC and the
Contractor parties have agreed to use their best efforts to conclude
negotiations on the new consolidated Concession Agreement as soon as possible,
with a view to the agreement receiving government and parliament approval and
then being signed by all parties at the earliest opportunity.
2025 Egypt Work Programme
El Fayum & North Beni Suef
· Egypt production guidance for 2025 is 1,400 - 1,600 bopd net
· El Fayum:
o Testing of the successful exploration commitment well completed in
February
o Application for commercial discovery declaration submitted to EGPC in 1Q
o Planning underway to commence two-well El Fayum drilling programme in 2H
· NBS:
o Expected completion of 3D seismic data processing in 1H, with
interpretation and mapping to follow
Health, Safety and Environment (HSE)
On health and safety, 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) and zero spillage incidents in 2024. The health and safety of our
workforce remains our highest priority, and we are committed to operating
safely and responsibly at all times to provide a safe and healthy working
environment for staff and contractors.
On environmental matters, while operational activities in 2024 have increased
compared to last year, we have maintained our emissions reduction. This is
driven by improved process optimisation and monitoring, and measures to reduce
the consumption of carbon-intensive fuel in our field operations. Compared to
our 2021 baseline, we are on track to achieve our Net Zero interim short-term
three-year target (2024-2026) of 5% emissions reduction. Pharos will continue
to work closely with our operating partners to identify opportunities to
reduce emissions to ensure we achieve our climate targets.
Group Reserves and Contingent Resources
The Group Reserves Statistics table below summarises our reserves and
contingent resources based on the Group's unitised net working interest in
each field. Gross reserves and contingent resources have been independently
audited by McDaniel & Associates Consultants Ltd. (McDaniel).
Group Reserves Statistics
Net working interest, mmboe TGT CNV Vietnam El Fayum NBS Egypt Group
Oil and Gas 2P Commercial Reserves(1,2)
As at 1 January 2024 6.3 2.8 9.1 13.6 0.8 14.4 23.5
Production (1.2) (0.4) (1.6) (0.5) - (0.5) (2.1)
Revision 1.0 0.4 1.4 (1.6) 0.1 (1.5) (0.1)
2P Commercial Reserves as at 31 December 2024 6.1 2.8 8.9 11.5 0.9 12.4 21.3
Oil and Gas 2C Contingent Resources(1,2)
As at 1 January 2024 6.3 5.6 11.9 9.6 - 9.6 21.5
Revision (0.8) (3.3) (4.1) (1.3) - (1.3) (5.4)
2C Contingent Resources as at 31 December 2024 5.5 2.3 7.8 8.3 - 8.3 16.1
Total of 2P Reserves and 2C Contingent Resources as at 31 December 2024 11.6 5.1 16.7 19.8 0.9 20.7 37.4
1) Reserves and Contingent Resources are categorised in line with 2018
SPE/WPC/AAPG/SPEE /SWLA Petroleum Resource Management System.
2) Assumes an oil equivalent conversion factor of 6,000 standard cubic feet
per barrel of oil equivalent.
Group's Net Working Interest Reserves and Contingent Resources
TGT Field at 31 December 2024 (mmboe) (net to Group's working interest)
Reserves(2) 1P 2P 3P
Oil 5.0 5.8 6.3
Gas(1) 0.1 0.3 0.4
Total 5.1 6.1 6.7
Contingent Resources(2) 1C 2C 3C
Oil 3.3 5.1 6.7
Gas(1) 0.2 0.4 0.5
Total 3.5 5.5 7.2
Sum of Reserves and Contingent Resources(3) 1P & 1C 2P & 2C 3P & 3C
Oil 8.3 10.9 13.0
Gas(1) 0.3 0.7 0.9
Total 8.6 11.6 13.9
1) Assumes oil equivalent conversion factor of 6,000 standard cubic feet per
barrel of oil equivalent.
2) Reserves and Contingent Resources have been audited independently by
McDaniel.
3) The summation of Reserves and Contingent Resources has been prepared by the
Company.
CNV Field at 31 December 2024 (mmboe) (net to Group's working interest)
Reserves(2) 1P 2P 3P
Oil 1.5 1.7 1.9
Gas(1) 1.0 1.1 1.2
Total 2.5 2.8 3.1
Contingent Resources(2) 1C 2C 3C
Oil 0.8 1.4 2.2
Gas(1) 0.6 0.9 1.4
Total 1.4 2.3 3.6
Sum of Reserves and Contingent Resources(3) 1P & 1C 2P & 2C 3P & 3C
Oil 2.3 3.1 4.1
Gas(1) 1.6 2.0 2.6
Total 3.9 5.1 6.7
1) Assumes oil equivalent conversion factor of 6,000 standard cubic feet per
barrel of oil equivalent.
2) Reserves and Contingent Resources have been audited independently by
McDaniel.
3) The summation of Reserves and Contingent Resources has been prepared by the
Company.
El Fayum Concession at 31 December 2024 (mmboe) (net to Group's working
interest)
Reserves(1) 1P 2P 3P
Oil 6.1 11.5 13.9
Contingent Resources(1) 1C 2C 3C
Oil 3.1 8.3 16.4
Sum of Reserves and Contingent Resources(2) 1P & 1C 2P & 2C 3P & 3C
Total 9.2 19.8 30.3
1) Reserves and Contingent Resources have been audited independently by
McDaniel.
2) The summation of Reserves and Contingent Resources has been prepared by the
Company.
North Beni Suef Concession at 31 December 2024 (mmboe) (net to Group's working
interest)
Reserves(1) 1P 2P 3P
Oil 0.3 0.9 1.0
Contingent Resources(1) 1C 2C 3C
Oil - - -
Sum of Reserves and Contingent Resources(2) 1P & 1C 2P & 2C 3P & 3C
Total 0.3 0.9 1.0
1) Reserves and Contingent Resources have been audited independently by
McDaniel.
2) The summation of Reserves and Contingent Resources has been prepared by the
Company.
Chief Financial Officer's Statement
Robust financial position
We have seen a strong financial performance from our operations and continued
strengthening of our liquidity position, where we have moved into a positive
net cash position of $16.5m compared to net debt of $6.6m reported at the end
of December 2023. We have achieved solid USD cash flow from our Vietnam and
Egypt portfolios and this has enabled us to accelerate the repayment of our
borrowings. Following the farm down of the Egypt concessions in 2022, the
Company continued to benefit from a full carry of all contractor costs for
G&A, opex and the capital programme through to April 2024. In addition,
Egypt operations became profitable during 2024, reversing the previous
historical tax losses since first production, and this has led to a gross-up
of revenues and tax charge in the Income Statement by $1.9m.
Returns to shareholders have been delivered through an additional $3.0m
committed to the Company's share buyback programme, completed in January 2025,
and the payment of an interim and final dividend in respect of the year ended
31 December 2023. The interim dividend of 0.33 pence per share was paid in
January 2024, and the final dividend of 0.77 pence per share, following
approval at the AGM in May 2024, was paid to shareholders in July 2024. In
addition, an interim dividend of 0.363 pence per share in respect of the year
ended 31 December 2024 was paid to shareholders in January 2025, and a final
dividend of 0.847 pence per share to be paid in July 2025 will be proposed to
shareholders at this year's AGM.
Operating performance
Revenues
Group revenues of $136.1m, prior to realised hedging loss of $0.1m (2023:
$168.1m prior to realised hedging loss of $0.2m) were negatively impacted by
an 18% decrease in sales volumes, leading to an inventory build of $6m in
Vietnam, and 3% fall in realised commodity prices.
Revenues for Vietnam of $115.4m (2023: $149.2m) decreased year on year as a
result of a reduction in sales volumes due to timing of cargoes and
maintenance shutdown at the BSR-owned Dung Quat refinery to which TGT crude is
sold, together with lower realised prices in general. The average realised
crude oil price was $85.52/bbl (2023: $87.42/bbl), a 2% decrease year on year,
and the premium to Brent was over $5/bbl on average (2023: just under $7/bbl).
Production was lower at 4,361 boepd (2023: 5,127 boepd) and, combined with
21% fall in sales volumes, this has led to an inventory build of $6.0m for the
Vietnam producing fields.
The revenue for Egypt of $20.7m (2023: $18.9m) increased year on year,
inclusive of $1.9m (2023: $nil) gross-up for corporate income taxes to be paid
by EGPC on behalf of PEF. There was lower average realised crude oil price,
down 4% to $74.83/bbl (2023: $78.18/bbl). Production rose to 1,440 bopd (2023:
1,381 bopd) and this included the NBS-SW1X well that commenced production in
December 2023. There are two discounts applied to the Egypt 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 increased to just
under $6/bbl for the year (2023: over $4/bbl).
Hedging
During 2024, the Group entered into zero cost collar hedges to protect the
Brent component of forecast oil sales and to ensure future compliance with its
obligations under the RBL facility agreement secured over the Group's
producing assets in Vietnam and to provide downside protection to cash flows
in the event of commodity price falling.
At 31 December 2024, the commodity hedges run until June 2025 and are settled
monthly. Our hedging positions for the year resulted in a $0.1m realised loss
(2023: loss of $0.2m).
For full year 2024, 31% of the Group's total oil entitlement production was
hedged, securing average floor and ceiling prices for the hedged volumes at
$63.4/bbl and $89.2/bbl, respectively. The RBL facility agreement requires the
Group to hedge at least 35% of Vietnam RBL production volumes and the current
hedging programme meets this requirement through to June 2025, leaving 72% of
1H 2025 Group entitlement production unhedged as at 31 December 2024.
Following the maturity of the RBL facility in July 2025, the Group intends to
continue hedging to mitigate the risk of commodity prices falling. As a
result, the Group placed two further hedges in January 2025 through which the
Group has hedged 20% of total forecast group entitlement production for 2025.
The table below sets out a summary of the Group's hedges outstanding as at 31
December 2024, which are all zero cost collars.
1Q25 2Q25
Production hedge per quarter - 000/bbls 150 90
Min. Average value of hedge - $/bbl 63.60 64.00
Max. Average value of hedge - $/bbl 88.94 90.17
Operating costs
Group cash operating costs, defined in the Non-IFRS measures section on page
40, were $37.8m (2023: $37.3m). Vietnam increased marginally by 1% from $28.8m
to $29.1m in 2024, the equivalent of $18.23/bbl (2023: $15.39/bbl). The
increase is partly due to costs relating to the FPSO as a result of lower
3(rd) party production throughput from the TLJOC, which increased the HLJOC's
share of the costs (TLJOC had 23.4% cost share in 2024 compared to 23.2% in
2023).
Cash operating costs in Egypt were $8.7m in 2024 (2023: $8.5m), which equates
to $16.51/bbl (2023: $16.86/bbl). The 2% decrease in cash operating costs per
barrel was mainly due to 4% higher production following full year contribution
from NBS, combined with a reduction in fixed costs due to devaluation of the
EGP against USD.
DD&A
Group DD&A associated with the producing assets decreased to $47.1m (2023:
$55.4m) driven by 15% decrease in production year on year for the Vietnam
assets and lower DD&A rates per barrel following the impairment charge
recorded on TGT in December 2023. This was partially offset by higher DD&A
from Egypt due to the increase in production and impairment reversal recorded
on El Fayum as at 30 June 2024.
DD&A per bbl is currently $26.38/boe for Vietnam (2023: $27.25/boe).
DD&A per bbl for Egypt is $9.49/boe (2023: $8.73/boe).
Administrative expenses
Administrative expenses in 2024 of $9.1m (2023: $9.0m) were comparable to
prior year. After adjusting for non-cash share based payment charges of $0.9m
(2023: $0.9m) the underlying administrative expenses were $8.2m (2023: $8.1m).
Other operating expenses
Other operating expenses in 2024 of $0.8m (2023: $nil) included $0.6m in
relation to the posthumous vesting of share scheme awards to the former CEO of
the Company, which was formally approved by the Remuneration Committee,
settled in cash and paid to his estate with the agreement of the executor. A
further $0.2m related to closure costs in respect of the US office, where the
former CEO of the Company was based.
Operating profit/(loss)
Operating profit from continuing operations for the year was $38.0m (2023:
$47.3m) excluding the net impairment reversal of $26.3m (2023: $65.4m net
impairment charge), reflecting the combined impact of a decrease in production
volumes and a lower commodity price environment during the year.
Other/restructuring expenses and gain/(loss) on fair value movement of
financial asset
Other/restructuring expenses in 2024 of $0.4m (2023: $0.6m) related to
restructuring costs for the Egypt office in Cairo.
As part of the 2022 farm-down of 55% of the Egypt concessions, Pharos is
entitled to contingent consideration depending on the average Brent price each
year from 2022 to the end of 2025 (with floor and cap at $62/bbl and c.$90/bbl
respectively). The contingent consideration is calculated annually and is
capped at a maximum total payment of $20.0m. The change in contingent
consideration is booked under gain/(loss) on fair value movement of financial
asset.
The gain on fair value movement of financial assets for the year of $0.3m
(2023: $0.3m loss) is due to upwards revision of the contingent consideration,
as there was an immaterial movement in the assignment fee payable to EGPC.
Finance costs
Finance costs decreased to $3.9m (2023: $10.2m), due to voluntary repayments
on the Group's RBL facility. Following the June 2024 redetermination, there
was a change in estimated future cash flows. Upon full repayment of the loan
in September 2024, a credit of $1.3m was recognised in the income statement.
There was also interest expenses and similar fees of $2.4m, unwinding of
discount on Vietnam decommissioning provisions of $2.2m and foreign exchange
losses of $0.6m primarily driven by devaluation of the EGP against USD.
In 2023, following the June and December 2023 redeterminations and the $35.0m
repayment of principal in relation to the Group's RBL, there was a change in
estimated future cash flows. As a result, a charge of $2.7m was recognised in
profit and loss, offset by an amortisation adjustment of $(1.4)m. There was
also interest expenses and similar fees of $6.4m, unwinding of discount on
Vietnam decommissioning provisions of $2.0m and foreign exchange losses of
$0.5m primarily driven by devaluation of the EGP against USD.
Cash operating cost per barrel* 2024 2023
$m $m
Cost of sales (1) 87.3 111.2
Less
Depreciation, depletion and amortisation (47.1) (55.4)
Production based taxes (9.2) (10.5)
Change in inventories 6.0 (4.0)
Trade receivables expected credit loss 2.5 (2.2)
Other cost of sales (1.7) (1.8)
Cash operating costs 37.8 37.3
Production (BOEPD) 5,801 6,508
Cash operating cost per BOE ($) 17.80 15.70
( )
(1) Includes impairment reversal/(charge) of financial asset
DD&A per barrel* 2024 2023
$m $m
Depreciation, depletion and amortisation 47.1 55.4
Production (BOEPD) 5,801 6,508
DD&A per BOE ($) 22.18 23.32
* Cash operating cost per barrel and DD&A per barrel are alternative
performance measures. See pages 40 and 41 for definitions.
Cash operating cost per barrel by Segment Vietnam Egypt Total
$m $m $m
Cost of sales 75.6 11.7 87.3
Less
Depreciation, depletion and amortisation (42.1) (5.0) (47.1)
Production based taxes (9.1) (0.1) (9.2)
Change in inventories 6.0 - 6.0
Trade Receivable expected credit loss - 2.5 2.5
Other cost of sales (1.3) (0.4) (1.7)
Cash operating costs 29.1 8.7 37.8
Production (BOEPD) 4,361 1,440 5,801
Cash operating cost per BOE ($) 18.23 16.51 17.80
DD&A per barrel by Segment Vietnam Egypt Total
$m $m $m
Depreciation, depletion and amortisation 42.1 5.0 47.1
Production (BOEPD) 4,361 1,440 5,801
DD&A per BOE ($) 26.38 9.49 22.18
Movements in Property, Plant and Equipment 2024 2023
$m $m
As at 1 January 279.8 381.8
Capital spend 17.8 12.1
Transfer from intangible assets - 2.9
Revision in decommissioning assets (4.9) (2.5)
DD&A - Oil and gas properties (47.1) (55.4)
DD&A - Other assets (0.2) (0.2)
Impairment reversal/(charge) - PP&E 28.3 (58.9)
As at 31 December 273.7 279.8
Property, Plant and Equipment 273.5 279.3
Right-of-use-Asset 0.2 0.5
As at 31 December 273.7 279.8
Taxation
The overall net tax charge of $37.1m (2023: $19.8m) principally relates to tax
charges in Vietnam of $26.8m and the deferred tax charge on impairment
reversals of $8.4m (2023: Vietnam tax charges of $36.0m less the deferred tax
credit on net impairment charges of $16.2m).
The Group's effective tax rate approximates to the statutory tax rate in
Vietnam of 50%, after adjusting for non-deductible expenditure and tax losses
not recognised.
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 PEF and the other contractor parties. The Group records
a tax charge, with a corresponding increase in revenue, for the tax paid by
EGPC on its behalf. As PEF became profitable in 2024, reversing the historic
tax loss position since first production, this led to a $1.9m tax charge being
recorded (2023: $nil).
One of the Group's companies entered into commodity zero cost collars
designated as cash flow hedges. In accordance with IAS 12, a deferred tax
asset has not been recognised in relation to the hedging losses of $0.1m
(2023: $0.2m) recorded in the year as it is unlikely that the UK tax group
will generate sufficient taxable profit in the future, against which the
deductible temporary differences can be utilised.
Profit/(loss) post-tax
The post-tax profit for the year of $23.6m (2023: $48.8m post-tax loss)
included $19.9m of restructuring expenses, re-measurements and impairments
(2023: $53.8m) which are shown in the table below. Business performance
post-tax profit for the year was $3.7m (2023: $5.0m).
Restructuring expenses, re-measurements and impairments are comprised of the
following:
Financial Statements Impact: 2024 2023
$m $m
Profit/(loss) for the year 23.6 (48.8)
Impact of restructuring expense, re-measurements and impairments
Revenue (0.1) (0.2) Realised hedging losses
Cost of sales 2.5 (2.2) Trade receivables expected credit loss
Other operating costs (0.8) - Posthumous vesting of share scheme awards and US office closure
Pre-licence costs (0.8) - Write-off of pre-licence costs
Impairment charge - Intangible assets (2.0) (6.5)
Impairment reversal/(charge) - Property, plant and equipment 28.3 (58.9)
Other/restructuring expenses (0.4) (0.6) Egypt redundancy cost following farm down and revision of carry with IPR
Gain/(loss) on fair value movement of financial asset 0.3 (0.3) Revision of contingent consideration in relation to Egypt farm-out
Finance costs 1.3 (1.3) Adjustment and amortisation of capitalised borrowing costs
Income tax (charge)/credit (8.4) 16.2 Deferred tax on impairment (reversal)/charge
Total 19.9 (53.8)
Business performance post-tax profit * 3.7 5.0
* A non-GAAP measure of underlying net profit from operations, which takes out
the impact of unusual, non-recurring transactions and the impact of non-cash
re-measurements and impairments.
Cash flow
Operating cash flow (before movements in working capital) was $84.3m (2023:
$103.8m). After tax charges of $35.3m (2023: $44.3m), other/restructuring
costs of $0.4m (2023: $nil), working capital inflow of $5.0m (2023: $15.0m
outflow) and interest received of $0.4m (2023: $0.4m), the cash generated from
operations was $54.0m (2023: $44.9m).
Cash generated from operations, after tax charges, exceptional expenses and
working capital movements, is the basis of our dividend framework.
Operating cash flow (before movements in working capital) adjusted for the
impact of the hedging positions of $0.1m loss (2023: $0.2m loss) gives an
underlying operational performance of $84.4m (2023: $104.0m), which is
consistent with the production decrease year on year and reduction in realised
commodity prices.
The decrease in receivables was $11.3m (2023: increase in receivables of
$19.1m). The movement in 2024 is primarily driven by $6.4m decrease from
Vietnam (2024: $7.4m increase) due to three cargoes being lifted in December
2023 compared to two cargoes in December 2024. Payments for the December 2023
cargoes were received in January 2024 and December 2024 cargoes were received
in January 2025.
There was a further $4.8m decrease in receivables from Egypt (2023: increase
in receivables of $11.4m), due to a reduction in EGPC receivables. As of 31
December 2024, the trade receivables with EGPC stood at $29.5m (2023: $37.4m)
and the Company received total payments of $25.5m during 2024, following
increased recovery during the year.
In Egypt, 2024 has brought about a general improvement of the macroeconomic
situation. In late February/early March 2024, the Egyptian Government (i)
announced a landmark agreement with ADQ (an Abu Dhabi sovereign wealth fund),
whereby the latter has acquired development rights of the new coastal city of
Ras El Hekma for $35 billion ($24 billion paid in cash and $11 billion as
conversion of UAE deposits at the Central Bank of Egypt), and then (ii) on 6
March 2024, raised all main interest rates by 600 basis points; signed a
significantly expanded new loan with the International Monetary Fund (IMF) ($8
billion, including the original $3 billion secured in December 2022), which
facilitated an additional $14 billion from other institutional lenders
including the World Bank and the European Union; and let the Egyptian pound
(EGP) fully float, with an immediate devaluation from c.31 to c.49 EGP per
USD, which forthwith eradicated the parallel FX market.
As a result of these policy decisions and diplomatic achievements, Egypt's
foreign currency reserves increased from $35.3 billion in February 2024 to
$47.1 billion in December 2024.
While the improved macroeconomic situation and increased FX reserves have not
yet translated into a significant improvement in EGPC's arrears to oil and gas
producers, the general trend is encouraging, as is the focus that the new
Minister of Petroleum & Mineral Resources, Karim Badawi, is placing on the
matter in order to ensure that companies resume investing in field activities.
PEF is entitled under contract to be paid for hydrocarbon sales in US dollars.
Until March 2024, the Group had opted to reject payment of any part of PEF's
receivables balance in EGP and continued to hold USD denominated receivables
due to the devaluation of currency against USD. Following the carry with IPR
having been fully utilised by April 2024, the Group opted to accept the
payment of part of the receivables balance in EGP in order to cover
operational expenditure, cash calls and other expenses in local currencies.
These factors have accelerated the recovery of Egyptian trade receivables
during 2024 and the Group remains optimistic that its receivable position will
continue to improve during 2025.
Capital expenditure on continuing operations for the year was marginally lower
at $26.1m (2023: $26.7m). On Block 16-1 - TGT Field, a two-well infill
programme completed successfully in October on time and under budget. In
Egypt, on El Fayum, the drilling of a second exploration commitment well
completed in September, encountering oil-bearing reservoirs in Abu Roach G
formation. In addition, a further El Fayum development well was put on
production in December 2024.
Net cash outflows from financing activities of $51.6m (2023: $50.1m outflow)
included outflows in relation to the RBL of $20.0m in May 2024 (2023: $22.4m
in June 2023 and $12.6m in December 2023) following the half year
redetermination process, plus a further $10.0m principal repayment in
September 2024. The amount drawn stood at $nil at year end (2023: $30.0m) and
the RBL facility, which is secured only over the Group's interest in the
Vietnam producing assets, matures in July 2025.
There was a net outflow of $9.2m in relation to the NBE revolving credit
facility (2023: $nil). This facility allows PEF to draw down 60% of the value
of each El Fayum invoice in USD. The amount drawn under the NBE facility as at
31 December 2024 was $nil (2023: $9.2m).
The Group is now debt free.
Financing activities also included $2.9m outflow (2023: $2.8m) in relation to
the $3.0m extension of the share buyback programme and there was a $5.9m
outflow (2023: $5.6m) following payment of the interim and final dividends of
$1.7m and $4.2m respectively for the 2023 financial year. The final dividend
for the 2023 financial year was approved by shareholders at the AGM in May
2024.
Tax strategy and total tax contribution
Tax is managed proactively and responsibly with the goal of ensuring that the
Group is compliant in all countries in which it holds interests. Any tax
planning undertaken is commercially driven and within the spirit as well as
the letter of the law.
This approach forms an integral part of the Group's sustainable business
model.
The Group's Code of Business Conduct and Ethics seeks to build open,
cooperative and constructive relationships with tax authorities and
governmental bodies in all territories in which it operates. The Group
supports greater transparency in tax reporting to build and maintain
stakeholder trust. Our Tax Strategy statement can be found on our website at
www.pharos.energy/responsibility/policy-statements/
(http://www.pharos.energy/responsibility/policy-statements/) . We have a
number of overseas subsidiaries which were set up some time ago and the Group
is now proactively planning to bring these into the UK tax net to ensure
greater transparency and comparability. No additional taxes are expected to be
due as a result of this exercise.
During 2024, the total payments to governments for the Group amounted to
$160.3m (2023: $188.0m), of which $138.7m or 87% (2023: $166.5m or 89%) was
related to the Vietnam producing licence areas, of which $92.9m (2023:
$110.8m) was for indirect taxes based on production entitlement. In Egypt,
payments to government totalled $19.1m (2023: $19.3m), of which $18.5m (2023:
$18.4m) related to indirect taxes based on production entitlement.
Balance sheet
Intangible assets increased during the year to $21.8m (2023: $18.2m).
Additions for the year related to Blocks 125 & 126 in Vietnam $2.8m (2023:
$3.1m) and Egypt $2.8m (2023: $8.0m), which included $2.2m in respect of the
East Saad 1X exploration well drilled on El Fayum. During the prior year, the
first exploration well on NBS (NBS-SW1X) was declared a commercial discovery
in September 2023 and put on production in December 2023, and exploration
costs of $2.9m relating to the development lease were transferred to property,
plant and equipment. There were total Exploration and evaluation expenditure
impairment charges of $2.0m in the year (2023: $6.5m), which included $1.4m
write-off of an El Fayum exploration well in the Abu Roach G and Upper
Bahariya formations drilled in the prior year.
The movements in the Property, Plant and Equipment asset class are shown
above.
Impairment reversals/(charges)
As a result of previously recognised impairment losses, combined with the
licence extensions, and movements in 2P reserves, we have tested each of our
oil and gas producing properties for impairment. The results of these
impairment tests are summarised below. For each producing property, the
recoverable amount has been determined using the value in use method. The
recoverable amount is calculated using a discounted cash flow valuation of the
2P production profile.
Summary of Impairments - Oil and Gas properties TGT CNV El Fayum NBS Total
$m $m $m $m $m
2024
Pre-tax impairment credit 19.8 3.6 4.9 - 28.3
Deferred tax charge (7.1) (1.3) - - (8.4)
Post-tax impairment credit 12.7 2.3 4.9 - 19.9
Reconciliation of carrying amount:
As at 1 January 2024 158.6 65.0 54.7 1.0 279.3
Additions 12.8 1.0 3.5 0.5 17.8
Changes in decommissioning asset (1) (4.9) - - - (4.9)
DD&A (32.7) (9.4) (4.6) (0.4) (47.1)
Impairment reversal 19.8 3.6 4.9 - 28.3
As at 31 December 2024 153.6 60.2 58.5 1.1 273.4
TGT CNV El Fayum NBS Total
$m $m $m $m $m
2023
Pre-tax impairment (charge)/credit (46.3) 0.3 (11.0) (1.9) (58.9)
Deferred tax credit/(charge) 16.5 (0.3) - - 16.2
Post-tax impairment charge (29.8) - (11.0) (1.9) (42.7)
Reconciliation of carrying amount:
As at 1 January 2023 242.4 76.4 62.5 - 381.3
Additions 1.3 3.0 7.6 - 11.9
Transfer from intangible assets - - - 2.9 2.9
Changes in decommissioning asset (1) - (2.5) - - (2.5)
DD&A (38.8) (12.2) (4.4) - (55.4)
Impairment (charge)/reversal (46.3) 0.3 (11.0) (1.9) (58.9)
As at 31 December 2023 158.6 65.0 54.7 1.0 279.3
( )
(1) Changes in decommissioning asset for TGT are due to a change in discount
rate and field abandonment plan, including two new infill wells completed in
October 2024. CNV reflects a change in discount rate and field abandonment
plan (2023: change in discount rate only for TGT; change in field abandonment
plan and discount rate for CNV)
Cash is set aside into abandonment funds for both TGT and CNV. These
abandonment funds are controlled by PetroVietnam and, as the Group retains the
legal rights to the funds pending commencement of abandonment operations, they
are treated as other non-current assets in the Financial Statements. As at 31
December 2024, the Group's total contribution to the funds was $56.0m (2023:
$53.7m).
Oil inventory was $9.3m at 31 December 2024 (2023: $3.3m), of which $9.1m
related to Vietnam and $0.2m to Egypt. Trade and other receivables decreased
to $47.9m (2023: $62.3m) of which $14.5m (2023: $19.0m) relates to Vietnam and
$32.7m (2023: $42.7m) relates to Egypt. Egypt trade receivables include $28.1m
from EGPC, after expected credit loss provision of $1.4m recognised under IFRS
9, where collection has been delayed by the devaluation of EGP and ongoing
restrictions on outgoing USD transfers by the Central Bank of Egypt previously
highlighted (2023: trade receivable from Egypt $33.4m after expected credit
loss provision of $4.0m). For Egypt in 2023, the closing balance included
$4.9m of carry which reflected the remaining disproportionate funding
contribution from IPR to compensate for net cash flows between the economic
date of the farm down transaction, 1 July 2020, and the completion date of 21
March 2022. The carry decreased every month by the cash calls received from
IPR and was utilised in full by April 2024.
Cash and cash equivalents at the end of the year were $16.5m (2023: $32.6m)
and the decrease was mainly driven by $39.2m net repayment of borrowings
(2023: $40.5m) and $10.6m reduction in utilisation of the carry compared to
prior year, offset by cash flows from operating activities of $54.0m (2023:
$44.9m) due to working capital inflows.
Trade and other payables were higher at $14.3m (2023: $12.5m), of which $5.3m
(2023: $7.9m) relates to Egypt, primarily net JV payables in relation to
operations and Stratton royalty obligation. $5.1m (2023: $2.2m) relates to
Vietnam payables and $3.9m (2023: $2.4m) Head Office payables. Tax payables
decreased to $3.2m (2023: $5.8m) which relates to Vietnam taxes on oil and gas
revenues.
Borrowings were $nil (2023: $40.5m) following voluntary repayment of the RBL
loan facility (2023: $31.3m RBL loan) and the NBE revolving credit facility
was also repaid in full (2023: $9.2m NBE credit facility).
Long-term provisions comprise the Group's decommissioning obligations for the
Vietnam fields. The decommissioning provision decreased from $53.8m at 2023
year end to $51.1m at 31 December 2024, as $2.2m unwind of the decommissioning
provision and $0.9m impact of two new infill wells on TGT, were offset by an
increase in discount rate from 3.87% to 4.58% for both TGT and CNV ($2.4m),
finalisation of revised abandonment plans for both fields ($0.8m) and also
extension of the production licences for both TGT and CNV to December 2031 and
December 2032 respectively ($2.6m). The amounts set aside into the abandonment
funds total $56.0m (2023: $53.7m). No decommissioning obligation exists under
the El Fayum and NBS Concessions.
Own shares
The Pharos Employee Benefit Trust holds ordinary shares of the Company for the
purposes of satisfying long-term incentive awards for senior management. At
the end of 2024, the trust held 3,784,406 (2023: 2,126,857), representing
0.89% (2023: 0.49%) of the issued share capital.
In addition, as at 31 December 2024, the Company held 9,122,268 (2023:
9,122,268) treasury shares, representing 2.15% (2023: 2.11%) of the issued
share capital. All shares purchased under the on-market buyback programme
originally announced in July 2022 and extended in January 2023 and December
2023 have been cancelled rather than retained in treasury.
Share buyback and dividend framework
Following a period of relatively stable commodity prices and a strengthening
of the Group's liquidity position, the Company committed to shareholder
returns in the form of share buybacks and dividends. On 6 December 2023, the
Company announced the continuation of a further $3.0m share buyback programme
in 2024 (the Second Programme Extension), of which $2.9m had been incurred by
the end of December 2024. The programme subsequently completed in full during
January 2025.
Pharos has a clear sustainable policy for regular dividend payments and this
has been set at returning no less than 10% of Operating Cash Flow (OCF) each
year in two tranches:
- An interim dividend of 33% of the previous year's total dividend, payable in
January of the following year; and
- A final dividend payable in July of the following year.
On 6 December 2023, an interim dividend of 0.33 pence per share, $1.7m
equivalent, was declared by the Board in respect of the year ended 31 December
2023 and paid on 24 January 2024 to shareholders on the register at the close
of business on 22 December 2023. A final dividend of 0.77 pence per share in
respect of the year ended 31 December 2023, $4.2m equivalent, was approved by
the shareholders at the Company's AGM in May 2024 and subsequently paid on 19
July 2024 to shareholders on the register at the close of business on 14 June
2024. This took the 2023 full year dividend to 1.10 pence per share, an
increase of 10% on the prior year.
The Board resolved to pay an interim dividend of 0.363 pence per share, $1.8m
equivalent, in respect of the year ended 31 December 2024 and this was paid on
22 January 2025 to shareholders on the Company's register as at 20 December
2024.
The Board have recommended a final dividend in respect of the year ended 31
December 2024 of 0.847 pence per share subject to approval of the shareholders
at the Company's 2025 AGM. Subject to this approval, the final dividend will
be paid in full on 18 July 2025 in Pounds Sterling to ordinary shareholders on
the register at the close of business on 13 June 2025, with an ex-dividend
date of 12 June 2025. This would take the 2024 full year dividend to 1.210
pence per share, which is 10% higher than prior year.
Going concern
Pharos continuously monitors its business activities, financial position, cash
flows and liquidity through detailed forecasts. Scenarios and sensitivities
are also regularly presented to the Board, including changes in commodity
prices and in production levels from the existing assets, plus other factors
that could affect the Group's future performance and position.
A base case forecast has been considered that utilises oil prices of $74.7/bbl
in 2025 and $72.9/bbl in 2026. The key assumptions and related sensitivities
include a "Reasonable Worst Case" (RWC) scenario, where the Board has taken
into account the risk of an oil price crash broadly similar to what occurred
in 2020. It assumes the Brent oil price down by a third to $49.5/bbl in April
2025 and gradually recovers to base price in next 12 months, concurrent with
5% reductions in Vietnam and Egypt production compared to our base case from
April 2025. Both the base case and RWC take into account effect of hedging
that has already been put in place at 31 December 2024 and subsequent hedges
placed in 2025, now covering 20% of total group entitlement production for
2025. We have therefore secured an average floor price and ceiling price of c.
$63.5/bbl and c. $87.6/bbl, respectively, for the entire hedged volumes in
2025. Under the RWC scenario, we have identified appropriate mitigating
actions, which could look to defer uncommitted expenditure as required.
In addition, we have conducted a reverse stress test sensitivity analysis that
indicates the magnitude of oil price decline required to breach our financial
headroom, assuming all other variables remain unchanged.
Our business in Vietnam remains robust, with a low breakeven oil price. In Q4
2025 to 1Q 2026, we have three infill wells and one appraisal well on TGT,
and one infill well on CNV planned to be drilled. The Group voluntarily repaid
the RBL loan facility in full on 17 September 2024 and is currently debt-free.
In Egypt, we have also focused on economically efficient programmes, including
development wells and recompletions on both El-Fayum and NBS in 2025. Pharos
has an extended $10m revolving credit facility until November 2025.
On the basis of the forecasts provided above, the Group is expected to have
sufficient financial headroom for the period up to 31 March 2026. Based on
this analysis, the Directors have a reasonable expectation that the Group has
adequate resources to continue its operations in the foreseeable future.
Therefore, the Financial Statements have been prepared using the going concern
basis of accounting.
Financial outlook
We are in a strong position as we move into 2025 with a number of value
catalysts:
· An extensive drilling campaign in Vietnam with the approval of
the licence extensions on our producing assets TGT and CNV
· Look forward to approval of the consolidation of our
concessions in Egypt with improved fiscal terms and increased longevity
· A strong and stable balance sheet with improved liquidity
position.
· Continued improvement in the economic situation in Egypt
unlocking more of our receivables position
Stable returns to shareholders are expected in 2025, with the dividend policy
of no less than 10% of OCF.
Sue Rivett
Chief Financial Officer
Condensed consolidated income statement
for the year to 31 December 2024
2024 2023
Notes $ million $ million
Continuing operations
Revenue 3 136.0 167.9
Cost of sales 4 (89.8) (109.0)
Impairment reversal/(charge) - Financial asset 4 2.5 (2.2)
Gross profit 48.7 56.7
Administrative expenses (9.1) (9.0)
Other operating costs 5 (0.8) -
Pre-licence costs (0.8) (0.4)
Impairment charge - Intangibles assets 3, 9 (2.0) (6.5)
Impairment reversal/(charge) - Property, plant and equipment 3, 10 28.3 (58.9)
Operating profit/(loss) 64.3 (18.1)
Other/restructuring expense 5 (0.4) (0.6)
Gain/(loss) on fair value movement of financial asset 0.3 (0.3)
Investment revenue 0.4 0.2
Finance costs 6 (3.9) (10.2)
Profit/(loss) before tax 3 60.7 (29.0)
Income tax charge 7 (37.1) (19.8)
Profit/(loss) for the year 23.6 (48.8)
Profit/(loss) per share (cents) 8
Basic 5.7 (11.4)
Diluted 5.4 (11.4)
Condensed consolidated statement of comprehensive income
for the year to 31 December 2024
2024 2023
$ million $ million
Profit/(loss) for the year 23.6 (48.8)
Items that may be subsequently reclassified to profit or loss:
Fair value (loss)/gain arising on hedging instruments during the (0.1) 0.6
year
11
Less: Loss arising on hedging Instruments reclassified to profit or 0.1 0.2
loss
11
Total comprehensive income/(loss) for the year 23.6 (48.0)
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 sheet
Group Company
2024 2023 2024 2023
Restated(1) Restated(1)
Notes $ million $ million $ million $ million
Non-current assets
Intangible assets 9 21.8 18.2 - -
Property, plant and equipment 10 273.5 279.3 - -
Right of use asset 10 0.2 0.5 - -
Investments - - 287.0 261.5
Loan to subsidiaries - - 18.4 16.8
Other assets 57.8 58.6 - -
353.3 356.6 305.4 278.3
Current assets
Inventories 9.3 3.3 - -
Trade and other receivables 47.9 62.3 0.5 0.4
Tax receivables 0.3 2.2 0.2 0.2
Cash and cash equivalents 16.5 32.6 0.8 1.7
74.0 100.4 1.5 2.3
Total assets 427.3 457.0 306.9 280.6
Current liabilities
Trade and other payables (14.3) (15.7) (3.8) (2.3)
Borrowings - (29.5) - -
Lease Liabilities (0.2) (0.3) - -
Tax payables (3.2) (2.6) - (0.9)
(17.7) (48.1) (3.8) (3.2)
Non-current liabilities
Other payables (0.2) (0.5) - -
Deferred tax liabilities (67.5) (68.2) - -
Borrowings - (11.0) - -
Lease liabilities - (0.2) - -
Long term provisions (51.1) (53.8) - -
(118.8) (133.7) - -
Total liabilities (136.5) (181.8) (3.8) (3.2)
Net assets 290.8 275.2 303.1 277.4
Equity
Share capital 33.1 33.7 33.1 33.7
Share premium 58.0 58.0 58.0 58.0
Other reserves 258.1 255.4 202.0 200.6
Retained (deficit) / earnings (58.4) (71.9) 10.0 (14.9)
Total equity 290.8 275.2 303.1 277.4
(1) See Notes 2(d) and 2(e)
The above condensed consolidated and company balance sheets should be read in
conjunction with the accompanying notes.
CONDENSED consolidated STATEMENT OF CHANGES IN EQUITY
Group
Called up Share premium Other reserves Retained Total
Notes
share capital
$ million
$ million
earnings /(deficit)
$ million
$ million $ million
As at 1 January 2023 34.3 58.0 253.6 (15.3) 330.6
Loss for the - - - (48.8) (48.8)
year
Other comprehensive - - 0.8 - 0.8
income
Share buy (0.6) - 0.6 (2.8) (2.8)
back
Share-based - - 1.0 - 1.0
payments
Distributions to shareholders - - - (5.6) (5.6)
(Restated)
Transfer relating to share-based payments - - (0.6) 0.6 -
As at 1 January 2024 (Restated(1)) 33.7 58.0 255.4 (71.9) 275.2
Profit for the - - - 23.6 23.6
year
Share buy back (0.6) - 0.6 (2.9) (2.9)
Share purchased - - (0.9) - (0.9)
Share-based - - 1.7 - 1.7
payments
Distributions to - - - (5.9) (5.9)
shareholders
12
Transfer relating to share-based payments - - 1.3 (1.3) -
As at 31 December 2024 33.1 58.0 258.1 (58.4) 290.8
Company
Called up Share premium Other reserves Retained Total
share capital
$ million
$ million
earnings /(deficit)
$ million
$ million $ million
As at 1 January 2023 (Restated(1)) 34.3 58.0 199.7 42.9 334.9
Loss for the year (Restated) - - - (50.0) (50.0)
Share buy back (0.6) - 0.6 (2.8) (2.8)
Share-based payments - - 1.0 - 1.0
Distributions to shareholders (Restated) - - - (5.6) (5.6)
Transfer relating to share-based payments - - (0.7) 0.6 (0.1)
As at 1 January 2024 (Restated(1)) 33.7 58.0 200.6 (14.9) 277.4
Profit for the year - - - 35.0 35.0
Share buy back (0.6) - 0.6 (2.9) (2.9)
Share-based payments - - 1.7 - 1.7
Distributions to - - - (5.9) (5.9)
shareholders
12
Transfer relating to share-based payments - - (0.9) (1.3) (2.2)
As at 31 December 2024 33.1 58.0 202.0 10.0 303.1
(1) See Notes 2(d) and 2(e)
The above condensed consolidated and company statements of changes in equity
should be read in conjunction with the accompanying notes.
CONDENSED CONSOLIDATED cash flow statements
for the year to 31 December 2024
Group Company
Notes 2024 2023 2024 2023
$ million $ million $ million $ million
Net cash from (used in) operating activities 13 54.0 44.9 (11.2) (8.1)
Investing activities
Purchase of intangible assets (5.4) (9.7) - -
Purchase of property, plant and equipment (18.4) (13.5) - -
Payment to abandonment fund (2.3) (3.5) - -
Consideration in relation to farm out of Egyptian assets(1) 5.0 15.6 - -
Contingent consideration received in relation to farm out of Egyptian assets 3.6 5.0 - -
Assignment fee in relation to farm out of Egyptian assets (0.4) (0.5) - -
Loans with subsidiaries - - 4.7 -
Dividends received from subsidiary undertakings - - 14.3 11.4
Net cash (used in) from investing activities (17.9) (6.6) 19.0 11.4
Financing activities
Share purchase (0.9) - - -
Repayment of borrowings (41.4) (44.2) - -
Proceeds from borrowings 2.2 9.2 - -
Interest paid on borrowings (2.4) (6.4) - -
Lease payments (0.3) (0.3) - -
Share buy back (2.9) (2.8) (2.9) (2.8)
Dividends paid to shareholders (5.9) (5.6) (5.9) (5.6)
Funding movements with subsidiaries - - - (2.1)
Net cash used in financing activities (51.6) (50.1) (8.8) (10.5)
Net decrease in cash and cash equivalents (15.5) (11.8) (1.0) (7.2)
Cash and cash equivalents at beginning of year 32.6 45.3 1.7 8.8
Effect of foreign exchange rate changes (0.6) (0.9) 0.1 0.1
Cash and cash equivalents at end of year 16.5 32.6 0.8 1.7
( )
(1) During the year IPR, acting as operator and agent, was authorised to
settle its operating liabilities of $3.7m (2023: $3.5m) and investing
liabilities of $1.3m (2023: $12.1m) against the consideration due from the
associated carry debtor amounting to $5.0m (2023: $15.6m). The Company has
disclosed the underlying cash flows as operating, investing or financing
according to their nature on the basis that, as a principal, the entity has
the right to the cash inflows and/or the obligation to settle the liability
and to ensure clarity of disclosure of the operating cash costs of the
business.
The above condensed consolidated and company cash flow statements should be
read in conjunction with the accompanying notes.
Notes to the condensed consolidated financial statements
1. General information
The financial information set out above does not constitute the Company's
statutory accounts for the years ended 31 December 2024 or 2023, but is
derived from those accounts. A copy of the statutory accounts for 2023 has
been delivered to the Registrar of Companies and those for 2024 will be
delivered following the Company's annual general meeting. The auditors have
reported on those accounts; their reports were unqualified, did not draw
attention to any matters by way of emphasis without qualifying their report
and did not contain statements under section 498(2) or (3) of the Companies
Act 2006. Whilst the financial information included in this preliminary
announcement has been computed in accordance with International Financial
Reporting Standards (IFRS) as issued by the International Accounting Standard
Board (IASB), this announcement does not itself contain sufficient information
to comply with IFRS. The financial statements are presented in US dollars
which is the functional currency of each of the Company's subsidiary
undertakings.
2. Material accounting policies
(a) Basis of preparation
The financial information has been prepared in accordance with the recognition
and measurement criteria of international accounting standards in conformity
with the requirements of the Companies Act 2006 and International Financial
Reporting Standards, as issued by the International Accounting Standard Board
(IASB) and endorsed by the UK Endorsement Board (UKEB).
The financial information has also been prepared on a going concern basis of
accounting.
(b) New and amended standards adopted by Pharos
A number of new or amended standards became applicable for the current
reporting period.
Amendments to IFRS 16 - Lease Liability in a Sale and Leaseback
The amendments in IFRS 16 specify the requirements that a seller-lessee uses
in measuring the lease liability arising in a sale and leaseback transaction,
to ensure the seller-lessee does not recognise any amount of the gain or loss
that relates to the right of use it retains.
The amendments had no impact on the Group's financial statements.
Amendments to IAS 1 - Classification of Liabilities as Current or Non-current
The amendments to IAS 1 specify the requirements for classifying liabilities
as current or non-current.
The amendments clarify:
• What is meant by a right to defer settlement
• That a right to defer must exist at the end of the reporting period
• That classification is unaffected by the likelihood that an entity will
exercise its deferral right
• That only if an embedded derivative in a convertible liability is itself
an equity instrument would the terms of a liability not impact its
classification
In addition, an entity is required to disclose when a liability arising from a
loan agreement is classified as non-current and the entity's right to defer
settlement is contingent on compliance with future covenants within twelve
months.
The amendments have not had an impact on the classification of the Group's
liabilities.
Supplier Finance Arrangements - Amendments to IAS 7 and IFRS 7
The amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial
Instruments: Disclosures clarify the characteristics of supplier finance
arrangements and require additional disclosure of such arrangements. The
disclosure requirements in the amendments are intended to assist users of
financial statements in understanding the effects of supplier finance
arrangements on an entity's liabilities, cash flows and exposure to liquidity
risk.
The amendments had no impact on the Group's financial statements.
(c) New standards and interpretations not yet adopted
Certain new accounting standards and interpretations have been published that
are not mandatory for 31 December 2024 year end and have not been early
adopted by the Group. These standards are not expected to have a material
impact on the Group in the current or future reporting periods nor on
foreseeable future transactions.
(d) Restatement of prior year results
As at 31 December 2023, a $1.7m current liability was recognised in respect of
the interim dividend announced in December 2023 and paid in January 2024.
While preparing these financial statements the Group noted the guidance set
out in the ICAEW Technical Release 02/17BL regarding "Guidance on Realised and
Distributable Profits under the Companies Act 2006" (TR 02/17BL) which
requires a legally binding liability to be established prior to the
recognition of an interim dividend. Since this obligation was not legally
binding as at 31 December 2023, the comparatives in the Consolidated Balance
Sheet and the Consolidated Statements of Changes in Equity as at 31 December
2023 have been restated for the Group and the Company to remove the interim
dividend liability. Going forward, the Group will recognise interim dividends
only in the period in which they are paid unless applicable accounting
practice, standards or guidance changes. This does not constitute any change
in the Group's previously announced dividend policy.
(e) Restatement of Fixed asset investments and joint arrangements in the
Company
Comparative information in respect of impairment charge and remaining
recoverable amount has been restated in relation to the recognition of an
additional impairment of investments in subsidiaries due to an error in
calculating the recoverable value of Pharos Energy plc's investment in Pharos
Exploration Limited. The investment balance as at 31 December 2023 was
overstated and an impairment charge for the year ended 31 December 2023 was
understated by $32.8m, $29.8m of which related to pre-2023 financial years. As
a result of the correction, investment in subsidiaries as at 31 December 2023
decreased from $294.3m to $265.1m and loss for the year increased from $47.0m
to $50.0m. The $29.8m additional loss in relation to pre-2023 financial years
has been corrected in opening retained earnings as of 1 January 2023 which has
the impact of reducing the investment balance as at 1 January 2023 from
$335.5m to $305.7m.
3. Segment information
The Group has one principal business activity being oil and gas exploration
and production. The Group's operations are located in South East Asia and
Egypt (the Group's operating segments). There are no inter-segment sales.
South East Asia and Egypt form the basis on which the Group reports its
segment information.
2024
SE Asia Egypt Unallocated Group
$ million
$ million
$ million
$ million
Oil and gas sales 115.4 20.7 - 136.1
Realised loss on commodity hedges - - (0.1) (0.1)
Total revenue 115.4 20.7 (0.1) 136.0
Cost of sales (75.6) (14.2) - (89.8)
Impairment reversal - Financial asset - 2.5 - 2.5
Administrative expenses - - (9.1) (9.1)
Depreciation, depletion and amortisation - Oil and gas (42.1) (5.0) - (47.1)
Depreciation, depletion and amortisation - Other - (0.2) - (0.2)
Other operating costs - - (0.8) (0.8)
Pre-licence costs - - (0.8) (0.8)
Impairment charge - Intangible assets - (2.0) - (2.0)
Impairment reversal - PP&E 23.4 4.9 - 28.3
Gain on fair value movement of financial asset - 0.3 - 0.3
Profit/(loss) before tax(1) 60.9 11.3 (11.5) 60.7
Tax charge on operations (26.8) (1.9) - (28.7)
Tax charge on impairment reversal (8.4) - - (8.4)
2023
SE Asia Egypt Unallocated Group
$ million
$ million
$ million
$ million
Oil and gas sales 149.2 18.9 - 168.1
Realised loss on commodity hedges - - (0.2) (0.2)
Total revenue 149.2 18.9 (0.2) 167.9
Cost of sales (95.6) (13.4) - (109.0)
Impairment charge - Financial asset - (2.2) - (2.2)
Administrative expenses - - (9.0) (9.0)
Depreciation, depletion and amortisation - Oil and gas (51.0) (4.4) - (55.4)
Depreciation, depletion and amortisation - Other - (0.2) - (0.2)
Pre-licence costs - (0.4) - (0.4)
Impairment charge - Intangible assets - (6.5) - (6.5)
Impairment charge- PP&E (46.0) (12.9) - (58.9)
Loss on fair value movement of financial asset - (0.3) - (0.3)
Profit/(loss) before tax(1) 5.6 (18.4) (16.2) (29.0)
Tax charge on operations (36.0) - - (36.0)
Tax credit on impairment charge 16.2 - - 16.2
(1) Unallocated amounts included in profit/(loss) before tax comprise
corporate costs not attributable to an operating segment, investment revenue,
other gains and losses and finance costs.
The accounting policies of the reportable segments are the same as the Group's
accounting policies.
Included in revenues arising from South East Asia and Egypt are revenues of
$115.4m and $20.7m which arose from the Group's two largest customers, who
contributed more than 10% to the Group's oil and gas revenue (2023: $149.2m
and $18.9m in South East Asia and Egypt from the Group's two largest
customers).
Geographical information
The Group's oil and gas revenue and non-current assets (excluding other
assets) by geographical location are separately detailed below where they
exceed 10% of total revenue or non-current assets, respectively:
Revenue
All of the Group's oil and gas revenue is derived from foreign countries. The
Group's oil and gas revenue by geographical location is determined by
reference to the final destination of oil or gas sold.
2024 2023
$ million
$ million
Vietnam 115.4 149.2
Egypt 20.7 18.9
136.1 168.1
2024 2023
$ million
$ million
Non-current assets
Vietnam 233.5 240.4
Egypt 62.0 57.6
295.5 298.0
Excludes other assets.
4. Cost of sales
2024 2023
$ million $ million
Depreciation, depletion and amortisation (see Note 10) 47.1 55.4
Production based taxes 9.2 10.5
Production operating costs 39.5 39.1
Change in inventories (6.0) 4.0
89.8 109.0
Impairment (reversal)/charge - financial asset (2.5) 2.2
87.3 111.2
5. Other operating costs and Other/restructuring expense
2024 2023
Other operating $ million $ million
costs
Share based 0.6 -
payments
Other 0.2 -
0.8 -
Share based payments of $0.6m relate to the posthumous vesting of share scheme
awards to the former CEO of the Company, settled in cash and paid to his
estate with the agreement of the executor. This cash settlement was provided
for in the relevant share scheme rules and formally approved by the
Remuneration Committee.
Other costs of $0.2m were incurred in relation to the closure of the Group's
US office.
2024 2023
Other/restructuring expense $ million $ million
Redundancy costs 0.4 -
Other - 0.6
0.4 0.6
In 2024, Other/restructuring expenses included $0.4m of redundancy costs
relating to the Egypt office in Cairo. In 2023, other expenses of $0.6m were
due to changes in the best estimate of the adjustment relating to the interim
period between the economic date of 1 July 2020 and the completion date of the
disposal of 55% interest in the Egypt concessions
6. Finance costs
2024 2023
$ million
$ million
Unwinding of discount on provisions 2.2 2.0
Interest expense and similar fees 1.1 7.7
Net foreign exchange losses 0.6 0.5
3.9 10.2
In 2024, $2.2m relates to the unwinding of discount on the provisions for
decommissioning (2023: $2.0m). The provisions are based on the net present
value of the Group's share of the expenditure which will be incurred at the
end of the producing life of TGT and CNV (currently estimated to be 7-8 years)
in the removal and decommissioning of the facilities currently in place.
Following the June 2024 redetermination and the $20.0m repayment of principal
in relation to the Group's reserve based lending facility, there was a change
in estimated future cash flows. The RBL loan facility was voluntarily repaid
early and in full on 17 September 2024, and a credit of $1.3m was recognised
in the income statement.
In 2023, following the June and December 2023 redeterminations and the $35.0m
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, a
charge of $2.7m was recognised in profit and loss, offset by an amortisation
adjustment of $(1.4)m.
7. Tax
2024 2023
$ million
$ million
Current tax
Corporation income tax 36.0 44.7
Adjustments in respect of prior years 1.8 (0.2)
37.8 44.5
Deferred tax
Deferred tax credit on operations (9.1) 8.5
Deferred tax charge/(credit) on impairment 8.4 (16.2)
(0.7) (24.7)
Total tax charge 37.1 19.8
The Group's corporation tax is calculated at 50% (2023: 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 2024 and
2023, both current and deferred taxation have arisen in overseas jurisdictions
only.
The charge for the year can be reconciled to the profit/(loss) per the income
statement as follows:
2024 2023
$ million
$ million
Profit/(loss) before tax 60.7 (29.0)
Tax at 50% (2023: 50%) 30.4 (14.5)
Effects of:
Non-taxable income (5.8) -
Non-deductible expenses 8.1 18.0
Egypt taxation at different rate to Vietnam effective tax rate (2.0) -
Tax losses not recognised 4.9 16.5
Utilisation of tax losses (0.3) -
Adjustments to tax charge in respect of previous periods 1.8 (0.2)
Tax charge for the year 37.1 19.8
The prevailing tax rate in Vietnam, where the Group produces oil and gas, is
50%. The tax charge in future periods may also be affected by the factors in
the reconciliation above.
In 2024, non-taxable income relates to the tax impact of Vietnam impairment
reversals of $(3.3)m in relation to the non-cost recovery pool and Egypt
impairment reversal of $(2.5)m. Non-deductible expenses primarily relate to
Vietnam DD&A charges for costs previously capitalised, which are
non-deductible for Vietnamese tax purposes of $6.2m (2023: Vietnam impairment
charges of $6.8m in respect of the non-cost recovery pool and DD&A charges
for costs previously capitalised of $10.4m). A further $0.9m (2023: $0.8m)
relates to non-deductible corporate costs including share scheme incentives
and $1.0m (2023: $nil) in relation to impairment of Egypt intangible assets.
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 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. As PEF became profitable in 2024, reversing the historic tax loss
position since first production, this led to a $1.9m tax charge being
recorded.
The effect from tax losses not recognised in 2024 relates to costs, primarily
of the Company, deductible for tax in the UK but not expected to be utilised
in the foreseeable future.
8. Earnings per share
The calculation of the basic and diluted earnings per share is based on the
following data:
Group
2024 2023
$ million
$ million
Gain/(loss) for the purposes of basic earnings per share 23.6 (48.8)
Effect of dilutive potential ordinary shares - Cash settled share awards and (0.9) -
options
Gain/(loss) for the purposes of diluted earnings per share 22.7 (48.8)
Number of shares (million)
2024 2023
Weighted average number of ordinary shares 417.0 427.2
Effect of dilutive potential ordinary shares - Share awards and options 2.7 -
Weighted average number of ordinary shares for the purpose of diluted 419.7 427.2
profit/(loss) per share
In accordance with IAS 33 "Earnings per Share", the effects of 2.9m
antidilutive potential shares have not been included when calculating dilutive
earnings per share for the year ended 31 December 2023, as the Group was loss
making.
9. Intangible assets
Intangible assets at 2024 year-end comprise the Group's exploration and
evaluation projects which are pending determination. Included in the additions
is Blocks 125 & 126 in Vietnam $2.8m (2023: $3.1m) and Egypt $2.8m (2023:
$8.0m), of which $0.6m (2023: $6.7m) relates to North Beni Suef.
In 2020, an IFRS 6 impairment indicator was triggered following the Group's
decision to defer all non-essential investment in Vietnam and Egypt at this
point. No substantive expenditure for its exploration areas in Vietnam and
Egypt was either budgeted or planned in the near future. Exploration costs
including costs associated with Blocks 125 & 126 in Vietnam of $17.9m and
costs associated with Egypt projects in the amount of $5.3m ($2.4m share
post-farm out) were written off in the income statement in accordance with the
Group's accounting policy on oil and gas exploration and evaluation
expenditure.
During 2023, approval was received from the Vietnamese Government in June for
the two-year extension to Phase One of the Exploration Period under Blocks 125
& 126 PSC to 8 November 2025. In July 2023, the Company published an
independent report prepared by ERCE on Blocks 125 & 126 in Vietnam which
makes estimates of prospective oil resources with an aggregated gross unrisked
Mean of 13,328 MMstb, covering those Prospects and Leads already identified.
The report supports the Company's internal assessments and paves the way for
further work to develop new Leads and mature Leads to Prospects. Detailed
drilling engineering studies for the proposed well on Prospect A commenced in
3Q 2024, with long lead items ordered to progress the opportunity on Blocks
125 & 126. The Company is continuing its discussions with potential
farm-in partners and rig contractors to complete all necessary work to drill
the first exploration well on this basin-opening play. Whilst ongoing costs
for exploration are therefore forecasted and funds are available for future
exploration, there is insufficient certainty of full recovery to justify the
reversal of the previous impairment charges in 2020. The accumulated
impairment charges against Vietnam exploration and evaluation expenditure at
31 December 2024 therefore remains at $17.9m (2023: $17.9m).
In Egypt, as part of the planned work programme for 2024, an exploration well
was drilled on El Fayum in August 2024. Testing of the well was carried out at
the beginning of February 2025. IPR, the operator of the El Fayum Concession,
applied to EGPC for commercial discovery declaration and early production
permission in February 2025. There were total Exploration and evaluation
expenditure impairment charges of $2.0m in the year (2023: $6.5m), which
included $1.4m write-off of an El Fayum exploration well in the Abu Roash G
and Upper Bahariya formations drilled during 2023 following expiration of the
licence, and $0.6m relating to NBS, $0.3m of which was seismic processing
carried out during 2024 and $0.3m related to a dry hole well, NBS-SW5X.
On NBS, the first exploration commitment well (NBS-SW1X) was declared a
commercial discovery in September 2023 and put on production in December 2023.
As a result, exploration costs of $2.9m relating to the development lease were
reclassified to property, plant and equipment during the prior year.
10. Property, plant and equipment
2024 Oil and gas Other Total
properties
$ million
$ million
$ million
Property, plant and equipment 273.2 0.3 273.5
Right of use asset 0.2 - 0.2
As at 31 December 2024 273.4 0.3 273.7
2023 Oil and gas Other Total
properties
$ million
$ million
$ million
Property, plant and equipment 278.8 0.5 279.3
Right of use asset 0.5 - 0.5
As at 31 December 2023 279.3 0.5 279.8
As a result of previously recognised impairment losses, combined with the
licence extensions, and movements in 2P reserves, we have tested each of our
oil and gas producing properties for impairment. The results of these
impairment tests are summarised below. For each producing property, the
recoverable amount has been determined using the value in use method. The
recoverable amount is calculated using a discounted cash flow valuation of the
2P production profile.
Summary of Impairments - Oil and Gas Properties 2024
2024 TGT CNV El Fayum NBS Total
$ million
$ million
$ million
$ million
$ million
Pre-tax impairment reversal 19.8 3.6 4.9 - 28.3
Deferred tax charge (7.1) (1.3) - - (8.4)
Post-tax impairment reversal 12.7 2.3 4.9 - 19.9
Reconciliation of carrying amount:
As at 1 January 2024 158.6 65.0 54.7 1.0 279.3
Additions 12.8 1.0 3.5 0.5 17.8
Changes in decommissioning asset(1) (4.9) - - - (4.9)
DD&A (32.7) (9.4) (4.6) (0.4) (47.1)
Impairment reversal 19.8 3.6 4.9 - 28.3
As at 31 December 2024 153.6 60.2 58.5 1.1 273.4
2023
2023 TGT CNV El Fayum NBS Total
$ million
$ million
$ million
$ million
$ million
Pre-tax impairment (charge)/reversal (46.3) 0.3 (11.0) (1.9) (58.9)
Deferred tax charge 16.5 (0.3) - - 16.2
Post-tax impairment charge (29.8) - (11.0) (1.9) (42.7)
Reconciliation of carrying amount:
As at 1 January 2023 242.4 76.4 62.5 - 381.3
Additions 1.3 3.0 7.6 - 11.9
Transfer from intangible assets - - - 2.9 2.9
Changes in decommissioning asset(1) - (2.5) - - (2.5)
DD&A (38.8) (12.2) (4.4) - (55.4)
Impairment (charge)/reversal (46.3) 0.3 (11.0) (1.9) (58.9)
As at 31 December 2023 158.6 65.0 54.7 1.0 279.3
( )
(1) Changes in decommissioning asset for TGT are due to a change in discount
rate and field abandonment plan, including two new infill wells completed in
October 2024. CNV reflects a change in discount rate, offset by a revision to
the field abandonment plan (2023: immaterial change in discount rate only for
TGT; change in field abandonment plan and discount rate for CNV)
Vietnam
The key assumptions to which the recoverable amount is most sensitive are oil
price, discount rate and 2P reserves. In 2024, for both TGT and CNV, there was
an upwards technical revision of 2P reserves following the granting of 5-year
extensions to the Petroleum contracts and a decrease in discount rate, which
has led to impairment reversals for both fields. As at 31 December 2024, the
recoverable value of the assets are estimated based on a post-tax nominal
discount rate of 10.7% (2023: 12.6%) and a Brent oil price of $74.2/bbl in
2025, $72.9/bbl in 2026, $74.0/bbl in 2027, $75.8/bbl in 2028 plus inflation
of 2.0% thereafter (2023: Brent oil price of $81.5/bbl in 2024, $79.0/bbl in
2025, $79.2/bbl in 2026, $76.3/bbl in 2027 plus inflation of 2.0% thereafter).
Testing of sensitivity cases indicated that a $5/bbl reduction in long-term
oil price used when determining the value in use method would result in
post-tax impairment charges (compared to new NBV, post-impairment reversal) of
$13.7m on TGT and $3.1m on CNV. A 1% increase in discount rate would result in
post-tax impairments of $2.5m on TGT and $0.9m on CNV (compared to new NBV,
post-impairment reversal).
We have also run sensitivities utilising the IEA (International Energy Agency)
scenarios described as being consistent with achieving the COP26 agreement
goal to reach net zero by 2050 (the "Net Zero price scenario"). The nominal
Brent prices used in this scenario were as follows; $74.2/bbl in 2025,
$72.9/bbl in 2026, $74.0/bbl in 2027, $65.8/bbl in 2028, $57.2/bbl in 2029,
$48.2/bbl in 2030, $48.2/bbl in 2031, $48.2/bbl in 2032 and $48.1/bbl in 2033.
Using these prices and a 10.7% discount rate would result in additional
post-tax impairment charges (compared to new NBV, post-impairment reversal) of
$20.5m on TGT and $5.2m on CNV.
Egypt
The key assumptions to which the recoverable amount is most sensitive are oil
price, discount rate, capital spend and 2P reserves. In 2024, there was a
decrease in the discount factor which has led to an impairment reversal for El
Fayum, partially offset by a downwards technical revision of El Fayum 2P
reserves due to change in the development plan. As at 31 December 2024, the
recoverable value of El Fayum is estimated based on a post-tax nominal
discount rate of 14.9% (2023: 18.0%) and a Brent oil price of $74.2/bbl in
2025, $72.9/bbl in 2026, $74.0/bbl in 2027, $75.8/bbl in 2028 plus inflation
of 2.0% thereafter (2023: an oil price of $81.5/bbl in 2024, $79.0/bbl in
2025, $79.2/bbl in 2026, $76.3/bbl in 2027 plus inflation of 2.0% thereafter).
For NBS, no material impairment arose as a result of the above impairment
considerations.
Testing of sensitivity cases indicated that a $5/bbl reduction in long term
oil price used when determining the value in use method would result in an
impairment charge (compared to new NBV, post-impairment reversal) of $6.6m for
El Fayum. A 1% increase in discount rate would result in impairment charges of
$2.2m on El Fayum (compared to new NBV, post-impairment reversal). We have
also run a sensitivity using 14.9% discount rate and the Net Zero price
scenario which would result in an additional impairment of $30.2m on El Fayum
(compared to new NBV, post-impairment reversal).
Other considerations
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. Hedge transactions
During 2024, Pharos entered into zero cost collar 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 and to provide
downside protection to cash flows in the event of commodity prices falling.
At 31 December 2024, the commodity hedges run until June 2025 and are settled
monthly. For full year 2024, 31% of the Group's total production was hedged,
securing average floor and ceiling prices for the hedged volumes at $63.4/bbl
and $89.2/bbl, respectively. The Group's RBL requires the Company to hedge at
least 35% of Vietnam RBL production volumes and the current hedging programme
meets this requirement through to June 2025, leaving 72% of 1H 2025 Group
production unhedged as at 31 December 2024 (2023: 36% of the Group's total
production was hedged, securing average floor and ceiling prices for the
hedged volumes at $64.5/bbl and $100.8/bbl). Following the termination of the
RBL agreement effective July 2025, the Group has decided to continue hedging
to mitigate the risk of a sharp decline in Brent price. As a result, the
company placed two further hedges in January 2025 through which the company
has hedged 20% of total forecast group entitlement production for 2025.
A summary of hedges outstanding as at 31 December 2024 is presented below,
which are all zero cost collar.
1Q25 2Q25
Production hedge per quarter - 000/bbls 150 90
Min. Average value of hedge - $/bbl 63.60 64.00
Max. Average value of hedge - $/bbl 88.94 90.17
Pharos has designated the zero cost collars 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 year end 31 December 2024, a loss of $0.1m was realised (2023: loss of
$0.2m). The outstanding unrealised gain on open positions as at 31 December
2024 amounts to $0.1m (2023: $0.1m).
The carrying amount of the zero cost collars 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 "Trade and other receivables" or "Trade and other payables" in
the consolidated statement of financial position. The receivable position as
of December 2024 was $0.1m (2023: $0.1m).
12. Distribution to Shareholders
Amounts recognised as distributions to equity holders in the year: 2024 2024 2023 2023
$ million Pence per Restated(1) Pence per
ordinary share $ million ordinary share
Prior year interim dividend, paid in the year 1.7 0.330 - -
Prior year final dividend, paid in the year 4.2 0.770 5.6 1.000
Total dividend, paid in year 5.9 1.100 5.6 1.000
Interim dividend for the year ended 31 December 2024 1.8 0.363
Proposed final dividend for the year ended 31 December 2024 4.4 0.847
(1) See Note 2(d)
The proposed final dividend for the year ended 31 December 2024 of 0.847 pence
per share takes the 2024 full-year dividend to 1.21 pence per share, in excess
of the minimum 10% of Operating Cash Flow (OCF) per the Company's dividend
policy and 10% higher than prior year.
The interim dividend for the year ended 31 December 2023 of 0.330 pence per
share ($1.7m) was paid on 24 January 2024. The final dividend for the year
ended 31 December 2023 of 0.770 pence per share ($4.2m) was approved by the
shareholders at the Company's AGM in May 2024 and subsequently paid on 19 July
2024.
The interim dividend for the year ended 31 December 2024 of 0.363 pence per
share ($1.8m) was paid on 22 January 2025 to shareholders on the register as
at 20 December 2024. The proposed final dividend of 0.847 pence per share
($4.4m) in respect of the year ended 31 December 2024 is payable on 18 July
2025 to all shareholders on the register at the close of business on 13 June
2025, subject to approval at the Company's AGM in May 2025.
13. Reconciliation of operating profit/(loss) to operating cash flows
Group Company
2024 2023 2024 2023
Restated(1)
$ million $ million $ million $ million
Operating profit/(loss) 64.3 (18.1) 20.6 (61.6)
Share-based payments 0.9 0.9 0.9 0.9
Depletion, depreciation and amortisation 47.3 55.6 - -
Impairment (reversal)/charge (26.3) 65.4 (31.2) 52.4
Taxes paid-in-kind (1.9) - - -
Operating cash flows before movements in working capital 84.3 103.8 (9.7) (8.3)
(Increase)/decrease in inventories (6.0) 3.9 - -
Decrease/(increase) in receivables (2) 11.3 (19.1) (1.7) (0.2)
(Decrease)/increase in payables (0.3) 0.2 (0.1) 0.1
Cash generated by (used in) operations 89.3 88.8 (11.5) (8.4)
Interest received 0.4 0.4 0.3 0.3
Other/restructuring expense outflow (0.4) - - -
Income taxes paid (35.3) (44.3) - -
Net cash from (used in) operating activities 54.0 44.9 (11.2) (8.1)
(1) See Notes 2(d) and 2(e)
(2) Includes $2.5m decrease (2023: $2.2m increase) in expected credit losses
in respect of Egypt trade receivables.
During the year, a total of $0.5m of trade receivables due from EGPC in Egypt
were settled by way of non-cash offset, of which $0.4m relates to the
assignment bonus settled upon receipt of contingent consideration in relation
to IPR Farm out and $0.1m to the training bonuses settled with EGPC.
During 2023, a total of $3.2m of trade receivables due from EGPC in Egypt were
settled by way of non-cash offset, out of which $2.2m relates to a second
instalment of assignment bonus due to EGPC in relation to the IPR Farm out,
$0.5m relates to a bonus due to EGPC for the NBS development lease and $0.5m
relates to training bonuses and fees paid to EGPC for participation in a bid
round process.
14. Preliminary results announced
Copies of the announcement will be available to download from
www.pharos.energy. The Annual Report and Accounts, together with notice of the
2025 AGM, will be posted to shareholders in due course.
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, free cash flow, operating cash per share and return on
capital employed.
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 are 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.
2024 2023
$ million $ million
Cost of sales 87.3 111.2
(Less)/add:
Depreciation, depletion and amortisation (47.1) (55.4)
Production based taxes (9.2) (10.5)
Change in inventories 6.0 (4.0)
Trade receivables expected credit loss 2.5 (2.2)
Other cost of sales (1.7) (1.8)
Cash operating costs 37.8 37.3
Production (BOEPD) 5,801 6,508
Cash operating cost per BOE ($) 17.80 15.70
Cash-operating costs per barrel by Segment (2024)
Vietnam Egypt Total
$ million $ million $ million
Cost of sales 75.6 11.7 87.3
Less: (42.1) (5.0) (47.1)
Depreciation, depletion and amortisation
Production based taxes (9.1) (0.1) (9.2)
Change in inventories 6.0 - 6.0
Trade receivables expected credit loss - 2.5 2.5
Other cost of sales (1.3) (0.4) (1.7)
Cash operating costs 29.1 8.7 37.8
Production (BOEPD) 4,361 1,440 5,801
Cash operating cost per BOE ($) 18.23 16.51 17.80
Depreciation, depletion and amortisation costs 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.
2024 2023
$ million $ million
Depreciation, depletion and amortisation 47.1 55.4
Production (BOEPD) 5,801 6,508
DD&A per BOE ($) 22.18 23.32
DD&A per barrel by segment (2024)
Vietnam Egypt Total
$ million $ million $ million
Depreciation, depletion and amortisation 42.1 5.0 47.1
Production (BOEPD) 4,361 1,440 5,801
DD&A per BOE ($) 26.38 9.49 22.18
Net cash/(debt)
Net cash/(debt) comprises interest-bearing bank loans, less cash and cash
equivalents.
2024 2023
$ million $ million
Cash and cash 16.5 32.6
equivalents
Borrowings (1) - (39.2)
Net cash/(debt) 16.5 (6.6)
(1) Excludes 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, exploration
expenditure, pre-licence costs and Other/restructuring expense items in the
current year.
2024 2023
$ million $ million
Operating profit/(loss) 64.3 (18.1)
Depreciation, depletion and amortisation 47.3 55.6
Pre-licence costs 0.8 0.4
Impairment (reversal)/ charge (26.3) 65.4
EBITDAX 86.1 103.3
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. For 2024, the Group is in a net
cash position overall and no data has therefore been presented.
2024 2023
$ million $ million
Net Debt - (6.6)
EBITDAX 86.1 103.3
Net Debt/EBITDAX - (0.06)
Gearing
Debt to equity ratio is calculated by dividing interest-bearing bank loans by
stockholder equity. The debt to equity ratio expresses the relationship
between external equity (liabilities) and internal equity (stockholder
equity).
2024 2023
$ million $ million
Total Debt (1) - 39.2
Total Equity 290.8 273.5
Debt to Equity - 0.14
(1) Excludes unamortised capitalised set up costs
Free cash flow
Free cash flow is calculated by subtracting capital cash expenditure from net
cash from operating activities.
2024 2023
$ million $ million
Net cash from operating activities 54.0 44.9
Capital cash expenditure (26.1) (26.7)
Free cash flow 27.9 18.2
Operating cash per share
Operating cash per share is calculated by dividing net cash from (used in)
continuing operations by number of shares in the year.
2024 2023
$ million $ million
Net cash from operating activities 54.0 44.9
Weighted number of shares in the year 417,019,506 427,170,044
Operating cash per share 0.13 0.11
Return on capital employed (ROCE)
ROCE is calculated by dividing operating profit/(loss) by total assets less
current liabilities. ROCE measures a company's profitability and the
efficiency with which its capital is employed.
2024 2023
$ million $ million
Operating profit/(loss) 64.3 (18.1)
Total assets less current liabilities 409.6 408.9
ROCE 15.7% (4.4)%
Glossary of Terms
AGM
Annual general meeting
bbl
Barrel
boe or BOE
Barrels of oil equivalent
boepd or BOEPD
Barrels of oil equivalent per day
bopd
Barrels of oil per day
BSR
Binh Son Refining and Petrochemical JSC, the operator of the Dung Quất
refinery, Quảng Ngãi Province, Vietnam
cash
Cash, cash equivalent and liquid investments
capex
Capital expenditure
CEO
Chief Executive Officer
CPR
Competent person's report or equivalent (e.g. mineral expert's report)
CNV
Ca Ngu Vang field located in Block 9-2, Vietnam
Company or Pharos
Pharos Energy plc
Contingent Resources, contingent resources or CR
Those quantities of petroleum to be potentially recoverable from known
accumulations by application of development projects but which are not
currently considered to be commercially recoverable due to one or more
contingencies
Contractor
The party or parties identified as being, or forming part of, the "CONTRACTOR"
as defined in the El Fayum Concession or, as the case may be, the North Beni
Suef Concession
DD&A
Depreciation, depletion and amortisation
EBITDAX
Earnings before interest, tax, DD&A, impairment of PP&E and
intangibles, exploration expenditure and other/restructuring items in the
current year
EGP
Egyptian Pounds, the lawful currency of the Arab Republic of Egypt
EGPC
Egyptian General Petroleum Corporation, an Egyptian state oil and gas company
and the industry regulator
El Fayum or the El Fayum Concession
The concession agreement for petroleum exploration and exploitation entered
into on 15 July 2004 between the Arab Republic of Egypt, EGPC and Pharos El
Fayum in respect of the El Fayum area, Western Desert, as amended from time to
time
ERCE
ERC Equipoise Limited, an independent energy consulting group
Financial Statements
The preliminary financial statements of the Company and the Group for the year
ended 31 December 2023
FPSO
Floating, production, storage and offloading Vessel
G&A
General and administration
GHG
Greenhouse gas
Group
Pharos and its direct and indirect subsidiary undertakings
1H
The first half of a calendar year
2H
The second half of a calendar year
HLJOC
Hoang Long Joint Operating Company, the operator of the TGT field on Block
16-1, Vietnam
HVJOC
Hoan Vu Joint Operating Company, the operator of the CNV field on Block 9-2,
Vietnam
IFRS
International Financial Reporting Standards
IMF
The International Monetary Fund
IPR or IPR Energy Group
The IPR Energy group of companies, including IPR Lake Qarun and IPR Energy AG,
or such of them as the context may require
IPR Lake Qarun
IPR Lake Qarun Petroleum Co, an exempted company with limited liability
organised and existing under the laws of the Cayman Islands (registration
number 379306), a wholly owned subsidiary of IPR Energy AG
JOC
Joint operating company
JV
Joint venture
km
Kilometre
km(2)
Square kilometre
LTI
Lost Time Injury
LTIP
Long Term Incentive Plan
m
Million (where used to describe a monetary amount)
McDaniel
McDaniel & Associates Consultants Ltd
mmboe
Million barrels of oil equivalent
MMstb
Millions of stock tank barrels
MOIT
The Vietnamese Ministry of Industry and Trade
NAV
Net asset value
NBE
The National Bank of Egypt, the largest Egyptian commercial bank and owned by
the state of Egypt
NBS, North Beni Suef or the North Beni Suef Concession
The concession agreement for petroleum exploration and exploitation entered
into on 24 December 2019 between the Arab Republic of Egypt, EGPC and Pharos
El Fayum in respect of the North Beni Suef area, Nile Valley
Net Zero Roadmap
The Group's detailed net zero roadmap to achieve net zero GHG emissions by
2050, published in December 2023
OCF
Operating cash flow
opex
Operational expenditure
PEF
Pharos El Fayum, a wholly owned subsidiary of the Company holding the Group's
participating interest in El Fayum and North Beni Suef
Petrosilah
An Egyptian joint stock company held 50/50 between EGPC and the Contractor
parties under the El Fayum Concession (being IPR Lake Qarun and PEF)
Petrovietnam
Vietnam Oil and Gas Group, the Vietnamese state-owned integrated oil and gas
company
PP&E
Property, plant and equipment
Prospect
An identified trap that may contain hydrocarbons. A potential hydrocarbon
accumulation may be described as a lead or prospect depending on the degree of
certainty in that accumulation. A prospect generally is mature enough to be
considered for drilling
PSC
Production sharing contract or production sharing agreement
Reserves or reserves
Reserves are those quantities of petroleum anticipated to be commercially
recoverable by application of development projects to known accumulations from
a given date forward under defined conditions. Reserves must further satisfy
four criteria: they must be discovered, recoverable, commercial and remaining
based on the development projects applied
RBL
Reserve-based lending facility
RFDP
Revised field development plan
TGT
Te Giac Trang field located in Block 16-1, Vietnam
TLJOC
Thang Long Joint Operating Company, the operator of Block 15-2/01, Vietnam,
with which the HLJOC shares access to the FPSO used for TGT production
UK
United Kingdom
USD, US dollars or $
United States dollars, the lawful currency of the United States of America
£
UK Pound Sterling
1C
Low estimate scenario of Contingent Resources
1P
Equivalent to proved Reserves; denotes low estimate scenario of Reserves
2C or 2C Contingent Resources
Best estimate scenario of Contingent Resources
2P Reserves or 2P Commercial Reserves
Equivalent to the sum of proved plus probable Reserves; denotes best estimate
scenario of Reserves
3C
High estimate scenario of Contingent Resources
3P
Equivalent to the sum of proved, probable and possible Reserves; denotes high
estimate scenario of Reserves
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END FR UNANRVAUOURRRecent news on Pharos Energy
See all newsREG - Pharos Energy PLC - Total Voting Rights
AnnouncementREG - Pharos Energy PLC - Share Purchases by Directors
AnnouncementREG - Pharos Energy PLC - 2024 Annual Report & Accounts & 2025 Notice of AGM
AnnouncementREG - Pharos Energy PLC - Management Change
AnnouncementREG - Pharos Energy PLC - Increase in Director Shareholding
Announcement