Pharos Energy plc, an oil and gas exploration and production company, issues the following operations update to summarise recent operational activities and to provide trading guidance in respect of the financial year to 31 December 2020. This is in advance of the Company’s Preliminary results. The information contained herein has not been audited and may be subject to further review and amendment.
- Group working interest 2020 production 11,373 boepd net, in line with production guidance:
- Egypt production 5,270 bopd
- Vietnam production 6,103 boepd net
- Egypt 2P reserves expected to be upgraded by approx.40%
- TGT drilling programme start date brought forward from Q4 to Q3 2021
- Two year field licence extensions for TGT and CNV formally granted by the Ministry of Industry and Trade in Vietnam
- Cash balances as at 31 December 2020 were approx. $24m; net debt $33m
- Group revenue for 2020 was c.$140m, including the benefit of our hedges of $23m
- Vietnam revenues for the year were c. $87m
- The average realised oil price per barrel from Vietnam was just under $45/bbl, representing a premium to Brent of just over $3/bbl
- Egyptian revenues for the year were circa $30m
- The average realised oil price per barrel from Egypt achieved was approx. $37/bbl, representing a discount to Brent of circa $4/bbl
- Cash cost savings on total group expenditure for the year of c.23% against the budget. Group reduction of G&A costs 35%
Egypt resources upgrade
McDaniel & Associates (a third-party reserves auditing company) is certifying 2020 year-end reserves which include improved waterflood performance based on recent field data, and a new drilling and workover plan for 2021 onwards based on an enhanced field development plan created by the company and ERCe. An upgrade of approx.40% in the proven and probable (2P) reserves is expected in the El Fayum concession.
The Company has engaged Jefferies to conduct a formal farm-out process for the Company’s assets in Egypt. Discussions are ongoing with potential industry partners for our Egyptian operations and the Company is encouraged by the level of interest.
El Fayum Production
Production for 2020 from the El Fayum Concession averaged 5,270 bopd. This is in line with the Egypt 2020 production guidance given on 12 May 2020 of 5,000-6,000 bopd.
El Fayum Development and Operations
Prior to the COVID-19 pandemic and the oil price shock, three drilling rigs and three workover rigs were operating through Q1 2020. Seven wells (five producers and two injectors) were drilled through to April 2020 in El Fayum.
Due to the uncertain macro-economic environment resulting from the global impact of COVID-19 and the oil price shock, the discretionary drilling programme in Egypt was scaled back to preserve capital with termination notices issued on five of the six rigs retaining just one workover rig, on a call out contract, for ongoing maintenance. Production operations in the field since, have been centred on well maintenance interventions and water-flood implementation. During the hiatus in drilling operations, Pharos has:
- Benefited from improved commercial terms with EGPC regarding the Western Desert discount and negotiated a reduction on the El Fayum discount. The Western Desert discount reduced in stages, from a high of $2.90/bbl in April to $0.60/bbl by October. In addition, we have agreed reductions with EGPC, effective 1 August 2020, on both the price discount applied specifically to the El Fayum crude ($1/bbl reduction) and on the crude handling fees paid at the refinery ($0.80/bbl reduction). Both of these reductions are in place for an initial period of six months while the Company continues its joint review with EGPC on the specification of the crude oil, on which the discount and fees are applied.
- Progressed negotiations with EGPC concerning potential improvements in the Concession Agreement terms in order to support a return to operational investment. If successful, these negotiations could lead to an improvement of up to $6/bbl in the breakeven price. These discussions with EGPC should be seen in the context of the positive progress made by certain other companies in the region.
- Reprocessed the 3D seismic data across El Fayum, for better subsurface definition.
- Conducted a waterflood evaluation for the phase implementation of a secondary recovery programme.
- Updated the sub-surface static model and creating field dynamic models to optimise the location of future wells, both oil producers and water injectors, as the development programme is implemented.
Exploration drilling activity is currently on hold while the Company focuses on development, production, and cash flow.
Egypt - North Beni Suef (NBS)
During 2020, work focused on technical and investigative work on wells previously drilled on the concession. Interpretation of the large pre-existing 3D seismic survey on the NBS concession continues and a number of low-risk prospects and potential producing field extensions extending from third party Development Leases to NBS area have been identified.
For more information about related Opportunities and Key Players visit Egypt Oil and Gas Projects