Pharos Energy Plc (LSE: PHAR): Delivering on expectations. Continued payments from EGPC
• Production from January to the end of November 2024 was 5,760 boe/d. This is line with our expectations.• FY24 production is expected to be around the same level. This is in line with our forecasts and within the FY24 production guidance range of 5.2-6.5 mboe/d.
• The new wells at TGT are also performing in line with expectations and production in Vietnam from January to the end of November was 4,324 boe/d. This is in line with our forecasts.
• The approval of the 5 year extension to the TGT and CNV licences is in its final stages. This is expected to allow Pharos to sanction additional wells and convert contingent resources into the reserves category. Pharos holds 11.9 mmboe 2C resources in Vietnam.
• Net cash (zero debt) at the end of November was ~US$18 mm. This is in line with our YE24 net cash forecasts. An additional US$10 mm has been paid by EGPC since the end of June (total of US$24 mm at the end of November) and the trade receivables with EGPC are unchanged since the end of June (US$31 mm).
• We reiterate our target price of £0.50 per share. The company has re-iterated its commitment to the dividend and the US$3 mm share buyback programme will provide support to the share price.
Valuation
The key near terms newsflow includes (1) the 5 year extension of the TGT and CNV licence with the existing 2C resources having an unrisked value of £0.18 per share, (2) securing a rig and a farm-in partner on blocks 125 and 126 in Vietnam and (3) the continued stabilization of payments in Egypt. Finalizing the consolidation of the Egyptian concessions would also allow the company to commit more capital to Egypt and grow production. Our Core NAV and ReNAV are broadly unchanged at £0.32/sh and £0.51/sh respectively.
Soco International is an oil and gas exploration and production company. Co. has exploration, development and production interests in Vietnam, and exploration and appraisal interests in the Republic of Congo and Angola. As of Dec 31 2016, Co.'s commercial reserves were 33.3 million barrels of oil equivalent.
Auctus Advisors is a specialist Equity Capital Markets and Advisory business with a focus in the Energy Sector.
The partners have complementary skill sets, with decades of experience across Equity Capital Markets, Investment Banking and the Energy industry. We have worked at Société Générale, Canaccord Capital, BMO Capital Markets and Schlumberger. Most recently we have worked together for many years at GMP FirstEnergy.
Auctus has been set up at the beginning of a new decade in which we see significant opportunities in the Energy space. Globally, demand for energy is at record levels and continues to grow. Conversely, investment in traditional energy sources has been severely constrained. We believe this imbalance creates opportunities for both companies and investors.
Auctus provides Corporate Broking, Equity Research and Investment Banking services.
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