Release Date: September 18, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Pharos Energy PLC (SOCLF, Financial) has become debt-free, having fully repaid all outstanding debt, including a legacy RBL and a facility with the National Bank of Egypt.
- The company announced a 10% increase in its interim dividend, reflecting a strong financial position and commitment to shareholder returns.
- Pharos Energy PLC (SOCLF) has received over $20 million in receivables year-to-date, significantly improving its cash flow position.
- The company has solid assets in Vietnam and Egypt, providing stable production and reliable cash flow, which supports its sustained dividend policy.
- Pharos Energy PLC (SOCLF) is actively pursuing license extensions in Vietnam and a consolidation proposal in Egypt to unlock further growth potential.
Negative Points
- The company faces challenges in securing a drilling slot and farm-in partners for its exploration project in Block 125, Vietnam, which has delayed progress.
- Production guidance has shown a downward trend over the past few years, with mature assets in Vietnam requiring careful management to sustain production levels.
- The macroeconomic environment in Egypt has impacted the ramp-up of activities and production growth, necessitating a consolidation project to improve fiscal terms.
- The timeline for receiving Vietnam license extensions is uncertain, as the approval process is not within the company's control.
- The waterflood projects in Egypt have not yet yielded significant production increases, although they have helped stabilize production levels.
Q & A Highlights
Q: When will Block 125 drilling happen, and how many more years will it take?
A: Mohamed Sayed, COO, explained that the company has been working on materializing the opportunity at Block 125, having completed seismic processing and interpretation. They have ordered long-lead items to preserve optionality for drilling next year. However, securing a drilling slot and farm-in partners has been challenging, and no hard timeframe can be provided yet.
Q: Will production guidance ever see an increase, given the downward trend in recent years?
A: Mohamed Sayed, COO, noted that while TGT and CNV are mature assets, there are several catalysts for future production growth, including drilling and appraisal activities. In Egypt, improvements in macroeconomic conditions and successful consolidation projects could enhance production guidance.
Q: What are your key priorities and objectives in your first year as CEO?
A: Katherine Roe, CEO, emphasized the focus on extracting value from existing assets, with active drilling and value catalysts like license extensions in Vietnam and consolidation projects in Egypt as near-term priorities. Medium to long-term strategies are still being developed.
Q: Do you still expect to receive the Vietnam license extension this year, and will it result in upward revisions to 2P results?
A: Mohamed Sayed, COO, expressed hope for receiving the extension this year, though the process is not fully within their control. Initial 2C to 2P progression will be modest, with potential for more additions following appraisal success.
Q: What's the latest on recouping receivables from the Egyptian government?
A: Sue Rivett, CFO, reported receiving over $20 million to date, with the government intending to pay bills regularly from October. There is a strong commitment from the government to clear arrears, and the company is in a better position than last year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
