Pharos Energy plc, an oil and gas exploration and production company, issues the following trading and operations update to summarise recent operational activities and to provide trading guidance in respect of the financial year to 31 December 2021. This is in advance of the Company’s Preliminary Results on 16 March 2022. The information contained herein has not been audited and may be subject to further review and amendment.

El Fayum Production, Development and Operations

Production for 2021 from the El Fayum Concession averaged 3,318 bopd. This is in line with the 2021 production guidance given in our Interim Results statement on 15 September 2021.

Plans were put in place to accelerate production enhancement in the second half of the year, which included the arrival of a second workover rig in August and the commencement of a three-well development drilling programme in November 2021. This was to help provide reservoir pressure support and maintain production ahead of the main multi-year and multi-well development programme to be implemented following completion of the transaction with IPR. Operations for the three-well drilling programme are expected to finish in February 2022.

Petrosilah, on behalf of the Joint Venture, is also currently tendering for equipment to continue the drilling campaign and for a H1 2022 commencement.

The estimated capital spend for the three development well programme is circa $2.6m net to Pharos (after adjustment, post the completion of the transaction with IPR). All expenditures are borne 100% prior to completion and will be taken into account through the interim period adjustment mechanism.

Egypt 2022 production guidance will be confirmed post transfer of operatorship to IPR.

El Fayum Exploration

Batran-1X was drilled in May 2021 inside the Tersa Development Lease. The well started the first phase of a long production test through Early Production Facility (EPF) in November by testing the single Upper Bahariya UB-1 zone to evaluate reservoir continuity and pressure support. During the initial test the well produced between 90 to 25bopd and the rate of the well continued to drop during the test. The next phase of well testing through the EPF would start with the completion of Abu Roash Lower G which may be done at a later date.

Egypt Commercial Update

Following approval of the Third Amendment by the House of Parliament on 26 December 2021, the Company was advised on 11 January 2022 that the relevant law was formally issued on 31 December 2021 by the Egyptian President, Abdel Fattah Al Sisi. Signature of the Third Amendment by Pharos, EGPC and the Minister of Petroleum & Mineral Resources is expected shortly.

The improved fiscal terms are backdated to November 2020, increasing the contractor share of revenue from c.42% to c.50% while in full cost recovery mode and lowering the development project break-even. 

North BeniSuef (NBS)

Interpretation of the large pre-existing 3D seismic survey on the NBS Concession continues with several drillable prospects already identified. 

Farm-out Transaction

As announced on 15 September 2021, the Group has entered into conditional agreements for the farm-out and sale of a 55% working interest and operatorship in each of the El Fayum and North BeniSuef Concessions to IPR Lake Qarun Petroleum Co., a wholly owned subsidiary of IPR Energy AG. 

The farm-out has received the requisite approval by Company’s shareholders with good progress made on all material conditions precedent, and Pharos expects completion of the transaction to occur in Q1 2022.