Pharos Energy (PHAR) H1 2024 earnings summary

Executive summary

• New CEO and COO appointed in July 2024, marking a refreshed leadership team focused on disciplined capital allocation and maximizing shareholder returns.

• Achieved stable production and robust cash flows from core assets in Vietnam and Egypt, with group 1H 2024 production averaging 5,851 boepd (Vietnam: 4,456 boepd; Egypt: 1,395 bopd).

• Transitioned to a net cash position of $17.5m at 30 June 2024, fully repaying all outstanding debt.

• Interim dividend increased by 10% to 0.363 pence per share, with ongoing share buyback and a focus on maximizing shareholder returns.

• The business has emerged from challenging years with a solid foundation, strong in-country relationships, and improved receivables, especially in Egypt.

Financial highlights

• 1H 2024 revenue was $65m, with a net profit of $15.3m, reversing a $14.3m loss in 1H 2023.

• Operating cash flow reached $27.9m, with free cash flow at $21.1m; cash balance at 30 June 2024 was $30.7m.

• Ended H1 2024 debt free, after full repayment of RBL and NBE facilities.

• Over $20m in Egyptian receivables collected year-to-date, with $14.8m received in 1H and $4m in July.

• Interim dividend of 0.363p per share, a 10% increase year-over-year, with an annualized shareholder return yield of approximately 7%.

Outlook and guidance

• 2024 production guidance: group 5,200–6,500 boepd net; Vietnam 3,900–5,000 boepd; Egypt 1,300–1,500 bopd.

• Focus on extracting and growing value from existing assets, with near-term catalysts including license extensions in Vietnam and a consolidation project in Egypt.

• Drilling activity resumed in both jurisdictions, with capital-intensive operations planned for H2 2024.

• Guidance for 2025 will be set after evaluating the impact of current drilling and operational results.

• Continued focus on sustainable shareholder returns, with a dividend policy of no less than 10% of operating cash flow.