Pharos Energy Plc's (PHAR:LSE) 70% working interest asset, Blocks 125 & 126 in the waters of Vietnam's Phu Khanh Basin, were shown in an independent estimate to contain prospective gross resources of between 1,200,000,000 barrels (1.2 Bbbl) and 29.8 Bbbl of oil, reported Auctus Advisors analyst Stephane Foucaud in a July 20 research note. The average resource is 13 Bbbl of oil.
"This is much more material than we anticipated and should attract industry attention in the context of the large discoveries made in 'new' areas around the world in recent years (Guyana, Suriname, South Africa, and Namibia)," Foucaud wrote.
150% Projected Return
England-based Pharos offers investors a significant potential return, noted Foucaud, of 150%. This is reflected in the difference between the company's current share price of £0.23 and Auctus' target on Pharos of £0.55 per share.
As for possible stock catalysts, "securing a farm-in partner before year-end 2023 (process ongoing) would be a very high impact event," Foucaud purported.
High-Grade Prospects Included
The resource estimate of Blocks 125 & 126 encompasses five high-grade prospects identified on a three-dimensional (3D) seismic survey over 23 horizons with potential. They are Prospect A Drape, Prospect A North, Lead A South, Prospect D, and Prospect E1.
The resource estimate excludes leads previously identified at the asset by means other than the 3D seismic survey.
Chances of Success
Foucaud reported that each of four out of the five prospects targets three to eight different horizons, which maximizes the chances of a well encountering at least one horizon. The geological chance of success for a single horizon is between 8% and 23%.
The Top F/G prospect is "the most material," wrote Foucaud. The prospective resource at Lead A South is 5.9 Bbbl; at Prospect A North, 2 Bbbl; and at Basement, 1 Bbbl and 0.5 Bbbl.
Part of Prospect D, with an average prospective resource of 1.3 Bbbl, aver has an estimated 17% geological chance of success. The prospect can be accessed in less than 500 meters of water.
Drilling at the asset, indicated Foucaud, is expected to begin next year.
Takeaways From H1/23
In his report, Foucaud also presented the highlights of Pharos' H1/23 results.
Production, in Egypt and Vietnam, was 6,915 barrels of oil equivalent per day (6,915 boe/d), under but close to Auctus' forecast of 7,053 boe/d. Where production fell short of expectations was in Egypt.
Pharos reiterated its full-year 2023 production guidance.
Exploration Highlights
The first exploration commitment well in the El Fayum Concession, reported Foucaud, encountered oil-bearing reservoirs in Egypt's Abu Roash G and Upper Bahariya formations.
"The well will be put on test to confirm deliverability over the coming weeks," the analyst added.
This followed other positive news that the recently announced discovery at North Beni Suef and the CNV-2PST1 well in Vietnam flowed three times the expected rate.
Reduction in Debt
Also noteworthy, Foucaud pointed out, Pharos decreased its net debt by US$13 million (US$13M) during the full two months of May and June. Net debt is now US$16M, down from US$29M.
"Given that receivables in Egypt have increased by about US$2M over the same period (US$7M-plus since year-end 2022), we view the net debt reduction as very positive," commented Foucaud.
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Disclosures for Auctus Advisors, Pharos Energy PLC., July 20, 2023
Copyright and Risk Warnings Pharos Energy plc (“PHAR” or the “Company”) is a corporate client of Auctus Advisors LLP (“Auctus”). Auctus receives, and has received in the past 12 months, compensation for providing corporate broking and/or investment banking services to the Company, including the publication and dissemination of marketing material from time to time.
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Author The research analyst who prepared this research report was Stephane Foucaud, a partner of Auctus.
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