Pharos Energy Plc (LSE: PHAR): MOU with EGPC in Egypt to improve terms and licence duration
• Pharos and IPR have signed a non-binding MOU with EGPC to use their best efforts to conclude negotiations for the merger of the El Fayum and North Beni Suef Concession Agreements.• While there is limited information at this stage, this is an important step that would unlock further investment through better fiscal terms and longer licence duration.
• The El-Fayum licence has a current expiry date of 2034 (including a 5 year extension), with 9 years remaining. A typical new licence in Egypt has a duration of 20-30 years, including two five-year extensions.
• IPR has already signed a third amendment on some of its other licences, which is encouraging regarding negotiations for El Fayum and North Beni Suef.
• In return for better terms and a longer licence duration, Pharos and IPR will need to commit to new work programs to boost production and unlock reserves and resources.
• While the amount of US$ receivables remains stable, we note that EGPC is regularly paying contractors.
• We reiterate our target price of £0.50 per share. The approval of the new FDPs for TGT and CNV in Vietnam would increase our Core NAV by £0.03 per share. Successful appraisal at TGT and CNV would derisk approximately 5 mmboe of resources, with an unrisked value of £0.15 per share.
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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