Pharos Energy Plc (LSE: PHAR): Return to production growth in Vietnam
• FY24 production and YE24 net cash have already been reported.• The FY25 production guidance of 5.0-6.2 mboe/d is unchanged. However the highlight of the press release is the upcoming programme in Vietnam.
• The FY25 capex guidance has increased to US$37–66 mm, up from the previous US$33 mm. The minimum programme includes drilling the TGT appraisal commitment well (18X) and procuring long-lead items for three TGT infill wells and two CNV wells (one appraisal well, 5X, and one infill well), scheduled for drilling in 2026. The upper capex range assumes these wells are drilled in 2025, potentially using two rigs operating simultaneously at TGT and CNV.
• The development programme could boost Vietnam production by ~20% in 2026 compared to 2025. Additionally, six more development wells and further continuation of production beyond the current license expiry date at TGT could bring 5.5 mmboe of 2C contingent resources into production - representing 90% of the field's current 2P reserves.
• Success at the 18X appraisal well, set to be drilled later this year at TGT, could de-risk an additional 1–3 mmboe of prospective resources in the western area of the field.
• In Egypt, receivables have remained stable since YE24. However, Pharos is awaiting agreement on new licence terms and improved payment conditions to accelerate its investment programme.
• We reiterate our target price of £0.50 per share. Approval of new FDPs for TGT and CNV to support further drilling programmes targeting 2C resources could increase our Core NAV by £0.26 per share. Additionally, a successful 18X appraisal well at TGT would unlock an unrisked value of £0.06 per share
Reserves and resources
At YE24, 2P reserves were estimated at 21.3 mmboe, compared to 23.5 mmboe at YE23. The difference primarily reflects 2024 production of 2.1 mmboe. However, Vietnam saw the addition of 2.4 mmboe of high-value 2P reserves, while Egypt’s reserves decreased by 1.5 mmboe due to the current licence duration and delays in production growth. Additionally, CNV is estimated to hold 2.3 mmboe of 2C resources.
Valuation
Our Core NAV and ReNAV are respectively £0.27 per share and £0.50 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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