Pharos Energy Share Price (PHAR)

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Thais cosying up to Vietnam.....

Worth remembering that dividends are paid based on a percentage of FCF. Not only should dividends (possibly incl a special dividend?) be much higher this year, but also there is enough cash to retain a bit more risk on the Prospect A well on 125. This is "only" a $50mn well, which is not "out of scope" in my opinion, especially if oil prices and realisations stay high!

I would rather they sole risked it than let the majors bully them into a longer timeframe. In fact I would rather they sole-risked it anyway!

Cavendish are on it 12 May.

54p

Drilling re5sults and oil prices drive strong cashflows The six-well drilling campaign in Vietnam is progressing on-time and on-budget, with the first five wells already contributing to production and reserves. In Egypt, a six-well drilling campaign has commenced, which – when combined with improved fiscal terms – is expected to drive additional value. These fully funded campaigns to grow production, coupled with exposure to higher oil prices, is driving strong cash flow generation, with Pharos reporting revenue YTD to April of US$49m and cash as at 30 April 2026 of US$31m. — Vietnam drilling success: On TGT, the three infill wells are now all online and currently contributing 2,800bopd gross (830bopd net), in-line with expectations. The appraisal well TGT-18X produced encouraging initial results of 2,000bopd gross (600bopd net), with further testing operations ongoing. On CNV, the 8P infill well continues to clean up and is now contributing 800bopd gross (200bopd net). Appraisal well CNV-5X is currently drilling, with completion expected by mid-year 2026. — Production in-line with expectations: Group working interest production to 30 April 2026 was 5,561boepd net, in-line with 2026 guidance of 5,200-6,400boepd. Vietnam production to 30 April 2026 has averaged 4,492boepd (2025: 4,095boepd), as flush production from the Vietnamese drilling programme offsets natural production declines. Egypt production to 30 April 2026 has averaged 1,069boepd (2025: 1,303boepd). Production in Egypt is expected to increase in 2H26, driven by a six-well work programme at El Fayum. — Robust financial position: Group revenue to 30 April 2026 was cUS$49m (2025: cUS$45m). The increase YoY has been driven by a significant increase in realised prices following the conflict in the Middle East. Vietnam realised prices ranged from US$72/bbl in January to US$126/bbl in April, with Vietnam production receiving a cUS$5/bbl premium to Brent. Group cash capex for 2026 remains on budget at cUS$50m. Cash as at 30 April 2026 was cUS$31m (YE25: US$40.2m). Egypt receivable balance at 30 April 2026 was US$7m (YE25: US$7.4m), with Pharos having received US$5.7m in the period. We note the announcement by the Minister of Petroleum in Egypt that all outstanding payments to oil and gas investment partners will be settled by the end of June 2026. — Geared to higher oil prices: As at 5 May 2026, 38% of 2026E production is hedged utilising a mix of collars at an average floor and ceiling price of US$60/bbl and US$79/bbl, and swaps with an average fixed price of US$93/bbl, leaving 62% of 2026E production unhedged. The Group has hedged 17% of 1H27E production, securing an average swap price of US$79/bbl, together with collars securing floor and ceiling prices at US$67/bbl and US$85/bbl, respectively, leaving 83% of 1H27 production unhedged. — M&A: Discussions with potential farm-in partners on Blocks 125 &126 continue. continues

Note that the Hormuz crisis should have increased net realisations from production by an amount sufficient to pay for about a quarter of the ProspectA well on 125…..

- Currently drilling the longest basement well yet. Has the potential to add materially to reserves if successful.

- Should be completely current on Egypt payments within weeks ie zero receivables overdue

- The prospect A well on 125 should cost $50mn to drill. IMO they should partner with PVEP and PTTEP on this (given that both are oil short and have been getting diplomatically closer) and not hang around waiting for some supermajor’s budget cycle. It needs to be drilled asap, even if they think extensions are available. They’ve had the asset for over a decade FGS!