WTI (June) $63.15 -52c, Brent (July) $66.09 -54c, Diff -$2.94 -2c.

USNG (June) $3.49 -16c, UKNG (June) 84.25p -1.08p, TTF (June) €35.225 -€0.36.

Oil price

Oil was already looking under pressure from the inventory stats, as I said yesterday the API reported an unexpected rise in crude stocks and the EIA followed last night with a build of 3.454m barrels which the market baulked at. Despite the products drawing, as one might expect at least for gasoline at this time of year, that was not enough.

And then, after the President landed in Qatar the stories about the Iran negotiations started to get into the market. If true then it is an almost total capitulation as uranium would only be produced for domestic usage but then we’ve heard that before. Brent is down $2.22 as I write…

Pharos Energy

Pharos has provided the following Trading and Operations Update ahead of the Company’s annual general meeting (AGM) on 22 May 2025 at 14.00 (BST). The information contained herein has not been audited and may be subject to further review and amendment.

Katherine Roe, Chief Executive Officer, commented:

“We have had a strong start to 2025, with production on track and solid free cash flow generation, underpinned by our high-quality asset base, debt-free position, and continued financial discipline. In Vietnam, our business remains robust with a low breakeven oil price, and we see significant potential for growth in production. Following the approval of the TGT and CNV licence extensions in December 2024, preparations are now well underway for the drilling of TGT and CNV appraisal wells. With the recent securing of rig contracts, we are progressing with our priority of appraising important new areas of our two fields to drive further growth and value from our producing assets. 

“In Egypt, we are making steady progress across our self-funded assets and are focused on completing the concession consolidation negotiations as soon as possible following the signing of an MOU with EGPC in February 2025 and recent positive traction. 

“We remain committed to our strategic priority to deliver growth, scale and attractive returns to shareholders, and believe the steps we are taking will drive meaningful production growth in 2026 and beyond.”

The AGM statement from Pharos continues the upmarket message from recent updates and the interview I did with CEO Katherine Roe recently and I have added below in case you missed it. With 4m production of 5,757 boepd (5,755) in line, guidance for the year remains at 5-6,000 boepd. 

Net cash is $22m ($15m) with receivables due from Egypt of $31.7m ($31m) with inbound payments of $4.9m in the period. Debt free and continuing to exercise strong financial discipline Pharos has tweaked capex for the year to $33-40m and an extra $17m is likely to fall into 2026 subject to drilling programmes.

The company is waiting for the consolidation of PSC’s, I can’t imagine that would be a problem as others are receiving such things and so I expect Pharos to hear before long. The company continues to look at the M&A market as they look for opportunities to ‘expand on the current asset base that can build scale and generate additional returns for shareholders’.

From its financially robust situation I see that Pharos is well set to expand their existing asset base with the drill bit but also to add by inorganic process should an opprtunity arise. I remain very happy with my 50p TP. 

Highlights                                                  

·      Group working interest production for the four months ended 30 April 2025 was 5,757 boepd net, in line with Group working interest 2025 production guidance of 5,000 – 6,200 boepd:

o  Vietnam 4,216 boepd. Vietnam 2025 production guidance 3,600 – 4,600 boepd net

o  Egypt 1,541 bopd. Egypt 2025 production guidance 1,400 – 1,600 bopd

·      Vietnam:

o  TGT: Preparations underway with the recent securing of rig contracts to drill the appraisal well 18X, targeting the block’s western area, and three infill wells expected to commence in 4Q

o  CNV: Planning continues for the drilling of one appraisal well 5X, unlocking the northern part of the field, and one infill well expected to commence in 4Q

o  3D seismic reprocessing on both assets continues, expected completion in 3Q

o  Blocks 125 & 126: Application submitted for a two-year PSC exploration phase extension in February, now well advanced; active engagement in seeking a farm-out partner continues

·      Egypt:

o  El Fayum: Application for a new development lease submitted to EGPC in May following the commercial discovery made by the exploration commitment well in February. Planning underway to commence two-well drilling programme in 2H

o  North Beni Suef (NBS): Ongoing processing of 3D seismic data expected to complete in 3Q, with mapping and interpretation to follow

o  Discussions with EGPC continue to progress positively following the signing of the MOU in February 2025 in relation to the proposed consolidation of the El Fayum and NBS concessions, with all parties committed to concluding negotiations as soon as possible

·      Group revenue for January to April 2025 c.$45m

·      Cash balances as at 30 April 2025 c.$22m; continued debt free position

·      Egypt receivable balance $31.7m, having received $4.9m in the four months to 30 April 2025

·      Forecast full year cash capex for the Group is narrowed to between $33m and c.$40m with an additional c.$17m expected to fall into early 2026. The timing of the work programme is dependent upon drilling schedules in Vietnam and the approval of a consolidated concession agreement in Egypt

·      Approximately 12% of the Group’s 2025 forecast production from June to December 2025 hedged, securing floor and ceiling prices at $63.3/bbl and $83.6/bbl, respectively

·      The Board continues to consider and review additional opportunities to expand on the current asset base that can build scale and generate additional returns for shareholders

 Core Finance CEO Interview: Katherine Roe of Pharos Energy

And finally…

Today sees the US PGA golf tournament being held at the Quail Hollow Club, North Carolina and after the Masters Rory is probably too short but he has an impressive record here and is drawn with Scheffler.

The O’s get to the League 1 play-off final after beating Stockport County on pens, they will play either the Addicks or Wycombe Wanderers who play tonight.