Pharos Energy Plc (LSE: PHAR): More share buybacks and more dividends
• Pharos has declared an interim dividend of 0.33 p per share for 2023 payable in January. The interim dividend represents ~33% of the final dividend of the previous year. This is in line with the dividend policy and our expectations.• The company is also looking to commit a further US$3 mm to share buybacks in 2024 which will provide additional support to the share price.
• In Egypt, the carry by IPR is expected to last until 1Q24. Within the current context, the receivables are expected to remain stable during 2024 with the level of investment being driven by the ability to recover US$ receivables.
• In Vietnam, Pharos continues to be wait for government approval for the licence extensions to 2031 (TGT) and 2023 (CNV), which is in line with expectations. The RFDP for the two new wells at TGT is also pending final government approval. We continue to anticipate that drilling will start in 2H24.
• Pharos continues to be in discussions with potential partners for Block 125 in Vietnam. Securing a farm-in partner would be a very high impact event. The process is also tied to securing a drilling rig suitable for deep offshore.
• We note that Mr Radoff has continued to buy shares. He now holds 14.1% of the company.
• We re-iterate our target price of £0.55/sh.
Valuation
We have reduced our Brent price assumptions for 4Q23 and 1Q24 to US$85/bbl and US$90/bbl respectively. Our Core NAV and ReNAV now stand at £0.36 and £0.50 per share. Assuming stable receivables in Egypt in 2024, we forecast >US$70 mm operating cash flow.
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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