Set to thrive Pharos Energy
Interim results 2020
26 August 2020
Interim results 2020 Set to thrive Pharos Energy 26 August 2020 / - - PowerPoint PPT Presentation
Interim results 2020 Set to thrive Pharos Energy 26 August 2020 / 2 26 August 2020 Pharos Energy 2020 Interim results Disclaimer Nothing in this presentation or in any accompanying management discussion of this presentation The Group
26 August 2020
Pharos Energy – 2020 Interim results 26 August 2020
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Disclaimer
Nothing in this presentation or in any accompanying management discussion of this presentation constitutes, nor is it intended to constitute: (i) an invitation or inducement to engage in any investment activity, whether in the United Kingdom or in any other jurisdiction; (ii) any recommendation or advice in respect of the ordinary shares (the Shares) in Pharos Energy plc or the group of companies of which it is the ultimate holding company (together the Group); or (iii) any offer for the sale, purchase or subscription of any Shares. The Shares are not registered under the US Securities Act of 1933 (as amended) (the US Securities Act) and may not be offered, sold or transferred except pursuant to an exemption from,
compliance with any other applicable state securities laws. This presentation contains certain forward-looking statements that are subject to risk factors and uncertainties associated with the oil and gas exploration and production business generally and specifically with the business, operations and financial position of the Group. These forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "anticipates", "projects", "expects", "intends", "may", "will", "seeks" or "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- looking statements include all matters that are not historical facts. There are a number of factors that could cause actual results or developments to differ materially 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. The Group undertakes no obligation to revise any such forward-looking statements to reflect any changes in the Group’s expectations or any change in circumstances, events or the Group’s plans and strategy. Accordingly, no reliance may be placed on the figures contained in such forward- looking statements. Forward-looking statements are not guarantees or representations of future
development of the industry in which the Group operates, are consistent with the forward-looking statements contained in the presentation, those results, conditions or developments may not be indicative of results, conditions or developments in subsequent periods. 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 accepted by Pharos Energy plc or any of its respective subsidiaries, affiliates and associated companies (or by any of their respective officers, employees or agents) in relation to it. All written and oral forward-looking statements attributable to the Group or to persons acting on the Group's behalf are expressly qualified in their entirety by the cautionary statements above and by all other cautionary statements and disclaimers contained elsewhere in the presentation. By attending this presentation and/or accepting a copy of it, you agree to be bound by the foregoing 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, without limitation, the obligation to keep this presentation and its contents confidential.
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Safeguarding people and assets
and responsibly
implemented Health & Safety procedures across our operations
Survived impact
Opportunities and
COVID-19 Oil price Opportunities
financial stability - part of the Company’s DNA
savings
work programmes allowed for quick reaction to oil price crash
development drilling and exploration opportunities
exploration potential
material gas
Complementary portfolio Our Assets
in line with guidance
5,979 bopd
6,114 boepd net
remains unchanged
boepd net
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Operating a sustainable business
without disruption in Egypt & Vietnam
locations
Social investment initiatives
* All data correct as at 1H 2020Carbon Disclosure Project
Continued participation in 2020
Task Force on Climate-related Financial Disclosures
Work to ensure we are prepared to report in line with the TCFD guidelines has begun and is progressing
Governance changes
Vietnam
measures in place Egypt
measures in place Vietnam
Charitable Donation Programme
donations of medicines and food to local families and hospital. Egypt
and protection suits to the El Fayum General Hospital
Business continuity
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1H 2020 Financial summary(1)
(1) All numbers are to 0 decimal place (2) Including the benefit of our 1H hedges of $21m (1H 2019: loss of $0.9m)
Cash Capex 1H 2019: $22m
$32m $80m(2)
1H 2019: $92m
$11.1/ bbl
1H 2019: $9.4/bbl Revenue Cash Opex Balance Sheet
Vietnam $310m Egypt $62m Net Liabilities ($123m) Total BS $249m FY 2019 Total BS $510m
12,093 boepd
1H 2019: 12,541 boepd Production
4% 13%
Net Debt
$36m
1H 2019: $34m
7%
49% 27%
Cash from Operations
$56m
1H 2019 : 55m Hedging gains
$21m
1H 2019: loss $0.9m
1%
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Financial Outlook
Vietnam Corporate
Group expenditure reduction for the year
25%
G&A cost reduction for the year
c.35%
Remuneration reduction
25%
For Chair, NEDs and Executive Directors
No bonuses will be paid for the year 2020 dividend payments withdrawn
Egypt
(1) Life of field, fully capex loaded, NPV 11 | (2) Life of field, fully capex loaded, NPV 13 | (3) Commitments have been deferred
Operating cost FY estimate
c.$12/boe
<$26/bbl
No commitments in Vietnam or Egypt for 2H 2020
(3)
Breakeven (1) Breakeven range (2)
$38-42/bbl
Operating cost FY estimate
c.$11/bbl
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Cash sources and uses
2020 Capex – c.85% incurred in 1H
$41.0 $31.9 $26.1 $2.9 $0.8 $58.5 $37.8
20 40 60 80 100 120
Cash Balance at 31 Dec 2019 Operating CF Investing Activites - Capex (incl. abandonment) Repayment of borrowings Interest on borrowings Other Cash Balance at 30 June 2020
$m
Sources $100m
flow generation
EGYPT $21m
Capex Spend
(including abandonment)
$37m
TGT $13m
125 & 126 $2m CNV $1m
El Fayum
CNV
TGT
Blocks 125 & 126
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Debt capacity & Hedging
uncommitted “accordion” basis over Vietnam assets
Vietnam now complete
$31.7m(1) made in accordance with the June redetermination
Reserve Based Lending Facility (RBL) Hedging
hedged at an average price of $44.8/bbl
Production forecast hedged for 2020
77% 60%
1H 2020 2H 2020
$61.3/bbl $47.1/bbl
(1) of which $9.4m paid in July 2020
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Pharos assets – Egypt, Israel, Vietnam
TGT & CNV
Egypt & Israel Vietnam Offshore Israel El Fayum & North Beni Suef onshore
Blocks 125 & 126 TGT & CNV Fields
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Reforecast drilling & completion schedule 2020
YEAR
2019 2020
QUARTER
1Q 2Q 3Q 4Q
Drilling Rig #1 Drilling Rig #2 Drilling Rig #3 Workover Rig #1 Workover Rig #2 Workover Rig #3 Rig stacked on zero rate Rig released out of contract Rig stacked on zero rate
Workover & water flood programme Workover Rig activity continues
Rig stacked on stand-by Rig released out of contract Oil production rate peaked at 7,009 bopd on 23 April 2020 Oil Price Shock 7 March
targeting deployment of capital in Egypt in early 2021 3 drilling rigs 3 workover rigs 7 wells (5 producers + 2 injectors) drilled through to April in Greater Silah Fields and N.E Tersa field
Drilling activities 1Q 2020
Egypt 2020 production guidance
5,000-6,000 bopd
El Fayum
1H 2020 Production 5,979 bopd Brent dropped to $9/bbl on 21 April 2020 (1)
(1) Source: Factset
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El Fayum - Reaction to COVID-19 and oil price fall in March as Brent reached <$20/bbl in April
(1) The Western Desert discount was reduced, initially from $2.90/Bbl to $1.50/Bbl in May 2020 and then further to $0.80/ Bbl from June 2020 onwards (2) Effective from 1 August 2020
and fees:
$0.8/bbl (1)
expiry 15 November 2020
be completed September 2020
enhancement
1Q 2021
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El Fayum
+ Unconventional + New Plays + Northern Area Leads
North Beni Suef
Arbitrary 3D seismic line across El Fayum and North Beni Suef NE SW
Low cost upside in an area with historically high success rates
Western and Eastern Desert Potential
El Fayum North Beni Suef
NE SW
El Fayum North Beni Suef
El Fayum Concession North Beni Suef Concession North Beni Suef 3D data extent Fayum 3D data extent
Apache Fields
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Vietnam
Vietnam 2020 net production guidance
5,500-6,500 boepd TGT & CNV Production
1H 2020 Production net
6,114 boepd
TGT field
1H 2020 Production net
4,431 boepd
CNV field
1H 2020 Production net
1,683 boepd
Cuu Long Basin - TGT and CNV Fields Phu Khanh Basin - Blocks 125 &126
Operator of Exploration Blocks 125 & 126
Blocks 125 & 126
TGT and CNV Fields
Technical work continues acquired 2D seismic, gravity and magnetic data to high-grade prospective areas on which to target future 3D seismic survey(s)
Blocks 125 & 126
TGT Field CNV Field
Initial two-year extension granted on TGT/ CNV licences
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TGT highlights
way to the Prime Minister’s office for formal endorsement
campaign scheduled to start 4Q 2021
budget
improvements proactively
6 firm producers 9 contingent wells
Full Field Development Plan
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TGT Deep - 15X well
H1-WHP H4-WHP H5-WHP
TGT- 31P Deep Discovery 1Q 2019 Oil found in deeper tight E horizons tested 250 bopd 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.
Deep & “Tight” Reservoirs TGT Producing Reservoirs
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Source Kitchen
Reservoir Seal Tilted fault block traps
Carbonate – Shallow water Fractured basement Structural trend Shelf & deep water Turbidite sands Deep water
Phu Khanh Basin Geological Model
Blocks 125 & 126
Source Type
Lacustrine and/or mangrove/swamp mudstones
Primary Reservoir
Late Oligocene-Early Miocene coastal plain, shoreface sand
Secondary Reservoir
Miocene deep water fans, Carbonates, fractured basement?
Trap
Faulted 3 and/or 4 way trap closures
Seal
Upper Miocene, Pliocene pelagic muds and intra-formational seal
basin
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Offshore Israel - Part of a regional MENA strategy
and Israel's Ratio Oil Exploration are JV partners
phase seismic studies only
potential
Mediterranean gas play Licences
8
Working interest
33.33%
Signed
October 2019
El Fayum and North Beni Suef Concessions
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Pharos Production and Development: Scope for Growth
Potential to increase production up to 20 mboepd within two years
Multiple development & infill drilling opportunities Illustration of the impact of different development investment scenarios on production1 Vietnam (2)
commence late 2021
Egypt (3)
cost development drilling programme and expanded waterflood
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.5 10 15 20
mboepd
El Fayum 4 Rig Scenario El Fayum 3 Rig Scenario CNV TGT
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significant short-term production growth
exploration opportunities – near-field, frontier and new plays
in-fill drilling to maintain production
potential
Pharos offers a platform for organic growth & multiple attractive investment opportunities
Diverse and complementary Asia-MENA E&P portfolio
Pharos regional knowledge and relationships provide route to access further material regional opportunities
Current focus is on preserving the
for existing shareholders through efficient capital allocation Material upside to be unlocked
Strategy and Outlook
Egypt Vietnam
Material upside to be unlocked
Israel
To create a Company of Scale Based on Cash Flow Growth, Capital Returns, Low-Cost Exploration & Transformational Upside
Summary
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Survival assured Now poised for growth Strong relationships in Asia/MENA
Inventory of growth opportunities exceeds current cash flow
Using industry leverage to expand programme
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Funding cycle
Balance Sheet Cash Flow from Operations Debt Capacity Investing in our business
Sustainable Growth
Maximising production Growth through developments Low cost exploration
Free Cash Flow Sustainable Dividends
2P Reserves Equivalent to the sum of Proved plus Probable Reserves; denotes best estimate scenario of Reserves. Also referred to as 2P Commercial Reserves bbl Barrel boe Barrels of oil equivalent boepd Barrels of oil equivalent per day bopd Barrels of oil per day Cash Cash, cash equivalent and liquid investments CNV Ca Ngu Vang Capex Capital Expenditure CEO Chief Executive Officer E&P Exploration & Production EGP Egyptian Pound EGPC Egyptian General Petroleum Corporation FFDP Full Field Development Plan FPSO Floating, Production, Storage and Offloading Vessel FY Full year G&A General and administration G&G Geological and Geophysical HLHVJOC Hoang Long and Hoan Vu Joint Operating Companies JOC Joint Operating Company JV Joint venture kbopd Thousand barrels of oil per day M&A Mergers and Acquisitions MENA Middle East and North Africa region mboepd Million barrels of oil equivalent per day mmbbl Million barrels mmboe Million barrels of oil equivalent NBE National Bank of Egypt Opex Operational expenses RBL Reserve Based Lending Facility TGT Te Giac Trang US$ United States Dollar W.I Working Interest YTD Year-to-Date
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Glossary of terms
www.pharos.energy
Investor Relations
Pharos Energy 48 Dover Street London W1S 4FF United Kingdom Tel: 020 7747 2000 Company No: 3300821