Interim results 2020 Set to thrive Pharos Energy - 26 August 2020
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Interim results
2020
Set to thrive
Pharos Energy
26 August 2020
Pharos Energy – 2020 Interim results 26 August 2020 / 2
Disclaimer
Nothing in this presentation or in any accompanying management discussion of this presentation The Group undertakes no obligation to revise any such forward-looking statements to reflect any
constitutes, nor is it intended to constitute: (i) an invitation or inducement to engage in any changes in the Group’s expectations or any change in circumstances, events or the Group’s plans
investment activity, whether in the United Kingdom or in any other jurisdiction; (ii) any and strategy. Accordingly, no reliance may be placed on the figures contained in such forward-
recommendation or advice in respect of the ordinary shares (the Shares) in Pharos Energy plc or looking statements. Forward-looking statements are not guarantees or representations of future
the group of companies of which it is the ultimate holding company (together the Group); or (iii) performance. Similarly, past share performance cannot be relied on as a guide to future
any offer for the sale, purchase or subscription of any Shares. performance. Even if the Group’s results of operations, financial and market conditions, and the
development of the industry in which the Group operates, are consistent with the forward-looking
The Shares are not registered under the US Securities Act of 1933 (as amended) (the US statements contained in the presentation, those results, conditions or developments may not be
Securities Act) and may not be offered, sold or transferred except pursuant to an exemption from, indicative of results, conditions or developments in subsequent periods.
or in a transaction not subject to, the registration requirements of the US Securities Act and in
compliance with any other applicable state securities laws. No representation or warranty, express or implied, is or will be made in relation to the accuracy or
completeness of the information in this presentation and no responsibility or liability is or will be
This presentation contains certain forward-looking statements that are subject to risk factors and accepted by Pharos Energy plc or any of its respective subsidiaries, affiliates and associated
uncertainties associated with the oil and gas exploration and production business generally and companies (or by any of their respective officers, employees or agents) in relation to it. All written
specifically with the business, operations and financial position of the Group. These forward-looking and oral forward-looking statements attributable to the Group or to persons acting on the Group's
statements can be identified by the use of forward-looking terminology, including the terms behalf are expressly qualified in their entirety by the cautionary statements above and by all other
"believes", "estimates", "anticipates", "projects", "expects", "intends", "may", "will", "seeks" or cautionary statements and disclaimers contained elsewhere in the presentation.
"should“, “could” or, in each case, their negative or other variations or comparable terminology, or
by discussions of strategy, plans, objectives, goals, future events or intentions. These forward- By attending this presentation and/or accepting a copy of it, you agree to be bound by the foregoing
looking statements include all matters that are not historical facts. limitations and conditions and, in particular, will be taken to have represented, warranted and
undertaken that you have read and agree to comply with the contents of this notice including,
There are a number of factors that could cause actual results or developments to differ materially without limitation, the obligation to keep this presentation and its contents confidential.
from those expressed or implied by these forward-looking statements and forecasts. For a detailed
analysis of the factors that may affect our business, financial performance, or results of operations,
we urge you to look at the Principal Risk and Mitigations section in our Annual Report and
Accounts.
Introduction
Ed Story
President and Chief Executive Officer
Pharos Energy – 2020 Interim results 26 August 2020 / 4
Introduction
COVID-19 Oil price Our Assets Opportunities
Safeguarding Survived impact Complementary Opportunities and
people and assets of oil price crash portfolio optionality
• Safety is the highest priority • Focus on capital discipline and • Group production 12,093 boepd net • Portfolio of opportunities and
financial stability - part of the in line with guidance optionality
• Committed to operating safely Company’s DNA o Egypt 1H production
and responsibly • Egypt: Onshore, low-cost
5,979 bopd development drilling and
• Intense focus on cash cost
• JOC’s in Egypt and Vietnam o Vietnam 1H production exploration opportunities
savings
implemented Health & Safety 6,114 boepd net • Vietnam
procedures across our operations • Operational flexibility in Egypt • Initial two-year extension granted
work programmes allowed for o TGT: 6 firm infill wells
• Business continuity and on TGT/ CNV licences
quick reaction to oil price crash o Blocks 125 & 126
operations have not been affected • 2020 Production Guidance exploration potential
remains unchanged
• Israel: low-cost option for
o Egypt 5,000-6,000 bopd material gas
o Vietnam 5,500-6,500
boepd net
A sustainable business
Jann Brown
Managing Director and Chief Financial Officer
Pharos Energy – 2020 Interim results 26 August 2020 / 6
Operating a sustainable business
Business continuity Social investment initiatives
• Despite COVID-19, operations have continued Egypt
without disruption in Egypt & Vietnam • Petrosilah donated face masks, face shields,
• Business continuity plans remain effective across our and protection suits to the El Fayum General
locations Hospital
Egypt Vietnam
• Onshore operations - robust health & safety • Continued support to HLHVJOC
measures in place Charitable Donation Programme
• Projects in the first half include charitable
Vietnam donations of medicines and food to local
• Offshore operations - robust health & safety families and hospital.
measures in place
Carbon Disclosure Project Task Force on Climate-related Financial Disclosures Governance changes
Continued participation in Work to ensure we are prepared to report in line with the • Chair and 2 NEDs appointed
2020 TCFD guidelines has begun and is progressing • Independent Board
* All data correct as at 1H 2020
Finance
Jann Brown
Managing Director and Chief Financial Officer
Pharos Energy – 2020 Interim results 26 August 2020 / 8
1H 2020 Financial summary(1)
Production Revenue Hedging gains Net Debt
12,093 boepd $80m(2) $21m $36m
4% 13%
7%
1H 2019: 12,541 boepd 1H 2019: $92m 1H 2019: loss $0.9m 1H 2019: $34m
Cash Opex Cash from Operations Cash Capex Balance Sheet
Vietnam $310m
$11.1/ bbl $56m $32m Egypt $62m
Net Liabilities ($123m)
27% 1% 49%
Total BS $249m
1H 2019: $9.4/bbl 1H 2019 : 55m 1H 2019: $22m FY 2019 Total BS $510m
(1) All numbers are to 0 decimal place
(2) Including the benefit of our 1H hedges of $21m (1H 2019: loss of $0.9m)
Pharos Energy – 2020 Interim results 26 August 2020 / 9 Financial Outlook Vietnam Egypt Corporate Breakeven (1) Breakeven range (2) Group expenditure reduction for the year
Pharos Energy – 2020 Interim results 26 August 2020 / 10
Cash sources and uses
Sources $100m 2020 Capex – c.85% incurred in 1H
$m
120
100
80 $41.0 $31.9 TGT
Capex $13m
60 Spend
$26.1 (including
$2.9 $0.8 EGYPT
abandonment)
40
$21m $37m
$58.5
20 $37.8
CNV
0 $1m
Cash Balance at Operating CF Investing Repayment of Interest on Other Cash Balance at
31 Dec 2019 Activites - Capex borrowings borrowings 30 June 2020
(incl. 125 & 126
abandonment)
$2m
• Generation of sustainable returns El Fayum TGT
• Balancing investment for longer term with immediate cash • Production Wells • TGT-15X
CNV • Abandonment funding
flow generation • No drilling activity Blocks 125 & 126
• Balancing shorter payback/higher Capital Productivity Index • Abandonment funding • Operational Office / G&GPharos Energy – 2020 Interim results 26 August 2020 / 11
Debt capacity & Hedging
Hedging Reserve Based Lending Facility (RBL)
• Delivered c.$21m of cash flow in 1H 2020
• Facility Agreement $125m, plus a further $125m on an
• c.60% of Group’s forecast production in 2H 2020 hedged at $47.1/bbl
uncommitted “accordion” basis over Vietnam assets
• c.35% of the Group’s forecast production until September 2021 is
hedged at an average price of $44.8/bbl • Half-yearly redetermination of the RBL producing assets in
• Building a level of protection Vietnam now complete
• Payment of $3.8m made in January 2020 and a further
Production forecast hedged for 2020
$31.7m(1) made in accordance with the June redetermination
77%
• Borrowing Base at $64.5m
60%
• Initial two-year extension of licence term on TGT /CNV
opens discussions with banks on extending tenor of RBL
$61.3/bbl $47.1/bbl
• Longer term Debt capacity for Egypt
o longer tenor RBL has potential to include Egypt
o terms with NBE over Egypt being finalised
1H 2020 2H 2020
(1) of which $9.4m paid in July 2020Asset overview
Mike Watts
Managing DirectorPharos Energy – 2020 Interim results 26 August 2020 / 13
Pharos assets – Egypt, Israel, Vietnam Vietnam
Egypt & Israel
Offshore Israel
El Fayum & North Beni Suef onshore
Blocks
125 &
126
TGT & CNV TGT &
CNV
FieldsEgypt
Pharos Energy – 2020 Interim results 26 August 2020 / 15
Reforecast drilling & completion schedule 2020
El Fayum
1H 2020 Production 5,979 bopd YEAR 2019 2020
QUARTER 1Q 2Q 3Q 4Q
Drilling activities 1Q 2020 Drilling Rig
Rig stacked on zero rate
#1
3 drilling rigs
3 workover rigs Drilling Rig
Rig released out of contract
#2
7 wells (5 producers + 2
injectors) drilled through to April Drilling Rig
#3 Rig stacked on zero rate
in Greater Silah Fields and N.E
Tersa field Workover & water flood programme
Egypt 2020 production guidance Workover Workover Rig activity
Rig #1 continues
5,000-6,000 bopd
Workover
Rig #2 Rig stacked on stand-by
• Management is currently
targeting deployment of Workover
Rig released out of contract
capital in Egypt in early 2021 Rig #3
Brent dropped to $9/bbl on 21 April 2020 (1)
Oil Price Shock
7 March Oil production rate peaked at 7,009 bopd on 23 April 2020
(1) Source: FactsetPharos Energy – 2020 Interim results 26 August 2020 / 16 El Fayum - Reaction to COVID-19 and oil price fall in March as Brent reached
Pharos Energy – 2020 Interim results 26 August 2020 / 17
Extensive Prospect & Lead Inventory
Low cost upside in an area with historically high success rates
NE El Fayum
El Fayum Concession
North Beni
Suef
El Fayum Concession
• >40 Near Field Prospects North Beni Suef
3D data extent
• 3D seismic and infrastructure supported Fayum 3D
data extent
+ New Plays
Apache Fields
• Deep Potential
• Carbonate build ups North Beni Suef
• Apollonia SW
+ Northern Area Leads NE Arbitrary 3D seismic line across El Fayum and North Beni Suef SW
+ Unconventional
• AR 'F’ Resource Play
North Beni Suef
Western and Eastern Desert Potential El Fayum North Beni SuefVietnam
Pharos Energy – 2020 Interim results 26 August 2020 / 19
Vietnam
TGT & CNV Production Cuu Long Basin - TGT and CNV Fields Phu Khanh Basin - Blocks 125 &126
1H 2020 Production net 6,114 boepd
• 70% W.I. and
Operator of
Exploration
TGT field Blocks 125 &
126
1H 2020 Production net 4,431 boepd
CNV field
1H 2020 Production net 1,683 boepd
TGT Field
Initial two-year extension granted on TGT/
CNV licences
Vietnam 2020 net production guidance
5,500-6,500 boepd CNV Field
Blocks 125 & 126
Technical work continues acquired 2D seismic, gravity TGT and Blocks
CNV 125 &
and magnetic data to high-grade prospective areas on
Fields 126
which to target future 3D seismic survey(s)Pharos Energy – 2020 Interim results 26 August 2020 / 20
TGT highlights
• TGT field licence extension of two years has been formally granted by the Ministry
of Industry and Trade in Vietnam
• All relevant branches of Government have signed-off on the FFDP and it is on its
way to the Prime Minister’s office for formal endorsement
• Long lead items to be ordered 3Q/4Q 2020 to support the new 6 wells drilling
campaign scheduled to start 4Q 2021
• Targeting gross production in excess of 20,000 boepd
• FPSO gas lift compressor upgrade completed in April ahead of schedule and within
budget
• TGT operations focussed on a well intervention programme to manage production
improvements proactively
Full Field Development Plan
6 firm producers
9 contingent wellsPharos Energy – 2020 Interim results 26 August 2020 / 21
TGT Deep - 15X well
H1-WHP H4-WHP H5-WHP
TGT
Producing
Reservoirs
Deep &
“Tight”
Reservoirs
TGT-15X appraisal well fracced 1Q 2020
The reservoir is too tight at this location, the deeper section of
the well is currently flowing in the range of 100-150 bopd and
the upper section is flowing at 200-300 bopd.
TGT- 31P Deep Discovery 1Q 2019
Oil found in deeper tight E horizons tested 250 bopdPharos Energy – 2020 Interim results 26 August 2020 / 22
Phu Khanh Basin Geological Model
Blocks 125 & 126
• Geological observations indicate:
o Demonstrated source generation and migration in the
basin
o Tertiary and basement reservoirs
• Oil Discovery in Block 124 (100% ENI)
o Confirms oil in the system
• Multiple structural and stratigraphic leads identified
on the new seismic
o Interpretation ongoing
Structural trend
Shelf & deep water
Turbidite sands
Tilted fault block traps
Deep water
Lacustrine and/or mangrove/swamp
Source Type mudstones
Late Oligocene-Early Miocene coastal plain,
Primary Reservoir shoreface sand Seal
Miocene deep water fans, Carbonates,
Secondary Reservoir fractured basement? Reservoir
Trap Faulted 3 and/or 4 way trap closures
Upper Miocene, Pliocene pelagic muds and
Carbonate – Shallow water
Seal intra-formational seal Fractured basement
Source KitchenIsrael
Pharos Energy – 2020 Interim results 26 August 2020 / 24
Offshore Israel - Part of a regional MENA strategy
Licences
8
Signed
October 2019
Working interest
33.33%
• Pharos, Cairn Energy plc
and Israel's Ratio Oil
Exploration are JV partners
• Cairn is the operator
• Low commitments - First
phase seismic studies only
• Tamar and Zohr Play
potential
El Fayum and
North Beni Suef
• Option on East
Concessions
Mediterranean gas playScope for Growth
Pharos Energy – 2020 Interim results 26 August 2020 / 26
Pharos Production and Development: Scope for Growth
Multiple development & Illustration of the impact of different development investment scenarios on production1
infill drilling opportunities
Vietnam (2) El Fayum 4 Rig Scenario
20
El Fayum 3 Rig Scenario
• TGT 6 infill wells planned to
commence late 2021 CNV
15
TGT
Egypt (3)
mboepd
10
• Highly flexible approach to low
cost development drilling
programme and expanded 5
waterflood
0
Potential to increase production up to 20 mboepd within two years
1) Production profiles are Pharos net working interest monthly production rates, pre economic cut-off.
2) Vietnam 2P profiles are Pharos HY20 estimates and are subject to audit; TGT infill well programme includes 6 firm wells approved by partners; ministerial sign-off expected.
3) ERCE profiles; drilling programme optimisation work continues.
4) ERCE is engaged by Pharos to provide technical consulting services for the El Fayum licence and TGT.Summary Ed Story Chief Executive Officer
Pharos Energy – 2020 Interim results 26 August 2020 / 28
Strategy and Outlook
To create a Company of Scale Based on Cash Flow Growth, Capital Returns, Low-Cost Exploration & Transformational Upside
Diverse and complementary Asia-MENA E&P portfolio
Pharos regional knowledge and relationships provide route to access further
material regional opportunities
Egypt Israel Vietnam
• Onshore, low cost, in-fill drilling path to • Low-cost option for material gas • TGT & CNV offshore producing fields - shallow
significant short-term production growth in-fill drilling to maintain production
• Multiple low-risk (extensive 3D) low-cost • Blocks 125 & 126 – material frontier exploration
exploration opportunities – near-field, potential
frontier and new plays
• Operational flexibility
Current focus is on preserving the
Material upside to be unlocked option value of the growth potential Material upside to be unlocked
for existing shareholders through
efficient capital allocation
Pharos offers a platform for organic growth & multiple attractive investment opportunitiesPharos Energy – 2020 Interim results 26 August 2020 / 29
Summary
Survival assured Strong relationships
Now poised for growth in Asia/MENA
Inventory of Using industry
growth opportunities leverage
exceeds current cash flow to expand programmeQ&A
Appendix
Pharos Energy – 2020 Interim results 26 August 2020 / 32
Funding cycle
Balance Maximising
Sheet production
Sustainable Growth
Cash Flow Investing Growth
from in our through
Operations business developments
Free Cash Flow
Debt Low cost
Capacity exploration
Sustainable
DividendsPharos Energy – 2020 Interim results 26 August 2020 / 33
Glossary of terms
2P Reserves EGP M&A YTD
Equivalent to the sum of Proved plus Egyptian Pound Mergers and Acquisitions Year-to-Date
Probable Reserves; denotes best
estimate scenario of Reserves. Also EGPC MENA
referred to as 2P Commercial Reserves Egyptian General Petroleum Corporation Middle East and North Africa region
bbl FFDP mboepd
Barrel Full Field Development Plan Million barrels of oil equivalent per day
boe FPSO mmbbl
Barrels of oil equivalent Floating, Production, Storage and Million barrels
Offloading Vessel
boepd mmboe
Barrels of oil equivalent per day FY Million barrels of oil equivalent
Full year
bopd NBE
Barrels of oil per day G&A National Bank of Egypt
General and administration
Cash Opex
Cash, cash equivalent and liquid G&G Operational expenses
investments Geological and Geophysical
RBL
CNV HLHVJOC Reserve Based Lending Facility
Ca Ngu Vang Hoang Long and Hoan Vu Joint
Operating Companies TGT
Capex Te Giac Trang
Capital Expenditure JOC
Joint Operating Company US$
CEO United States Dollar
Chief Executive Officer JV
Joint venture W.I
E&P Working Interest
Exploration & Production kbopd
Thousand barrels of oil per dayInvestor Relations Pharos Energy Tel: 020 7747 2000 48 Dover Street London W1S 4FF United Kingdom Company No: 3300821 www.pharos.energy
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