Pharos Energy Plc (LSE: PHAR): Production boost expected by mid 2026
• FY25 production averaged 5,398 boe/d, comprising 4,095 boe/d from Vietnam and the balance from Egypt. This is consistent with the 5,391 boe/d reported in November and within the 5.2–6.0 mboe/d guidance range.• Two infill wells, TGT H1 and TGT H5, are now onstream and performing in line with expectations. We assume ~1.6 mboe/d of average gross production from each new TGT well over their first three months.
• FY26 production guidance is 5.2–6.4 mboe/d, including 4.0–4.95 mboe/d from Vietnam and 1.2–1.45 mbbl/d from Egypt. The four infill wells (TGT H1 and TGT H5 already producing, CNV 8P expected onstream in March, and TGT H4 due mid 2026) should keep Vietnam output broadly in line with 2025 levels. The two appraisal wells—TGT 18X (results expected in March) and CNV 5X (results around mid 2026)—have the potential to lift Vietnam production by ~20%.
• FY26 capex is set at ~US$50 mm, including US$31 mm for the Vietnam drilling programme, with the remainder allocated to decommissioning, long lead exploration items in Vietnam, and six wells in Egypt.
• Key catalysts include results from TGT 18X, targeting the underexplored western area of TGT, and CNV 5X, which could unlock the northern extension of CNV and add reserves. Our combined unrisked NAV for these opportunities is £0.26 per share.
• The farm out process for Blocks 125 & 126 remains underway, with some discussions now at an advanced stage. Securing a partner would be highly material for Pharos.
• We reiterate our £0.50 per share target price, supported by a ~5.5% dividend yield.
YE25 Financials
Pharos ended YE25 with ~US$40 mm of net cash, ~US$10 mm above our expectations. The stronger position reflects the US$20 mm payment from EGPC for outstanding receivables (already announced) and lower FY25 capex, with a greater share of Vietnam programme costs now falling into 2026. Aggregate 2025–2026 capex totals US$78 mm, broadly in line with our prior US$71 million estimate. The solid YE25 balance sheet places Pharos in a strong position to deliver its programme and pursue additional growth opportunities.
Valuation
We now forecast ~6.1 mboe/d production in 2026 and we have incorporated the capex guidance in our model. Our Core NAV and ReNAV stand at £0.31 and £0.49 per share, 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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