Pharos farms out Egyptian concessions
Pharos Energy announced on September 15 it had cut a deal worth up to $155mn to farm out 55% interests in the El Fayum and North Beni Suef concessions to fellow Egyptian player IPR.
Pharos will also transfer operatorship to IPR of the permits, which are situated southwest of Cairo and contain 10 known fields. It will receive an initial payment of only $5mn, but IPR will also cover $38.4mn of Pharos' future work costs and pay up to $20mn each year between 2022 and 2025 depending on oil prices.
El Fayum and North Beni Suef are Pharos' only assets in Egypt, although the company also works in Vietnam and Israel. IPR operates five concessions and has interests in three more in the Western Desert, the Nile Delta, the Gulf of Suez and the Eastern Desert regions. It had sought to buy the Egyptian assets of the UAE's Dana Gas last year, but the latter cancelled the deal after market conditions improved. IPR took Dana to an arbitration court but lost the case.
"The farm-out, while instantly boosting our balance sheet, will allow the entry of a partner who has committed to carry Pharos on a capital programme on these Egyptian assets, which will in turn lead to increased production, helping to fulfil the full potential of the concessions," Pharos CEO Ed Story said.
Pharos produced 3,718 barrels of oil equivalent/day in Egypt in the first half of this year, down from 5,979 boe/d a year earlier. Its total output came to 9,147 boe/d in the period. The company plans to launch a three-well drilling programme in Egypt next month to boost extraction.
The deal with IPR is due to close in the first quarter of 2022.