Pharos Energy (LSE:PHAR) — Preliminary Results

0:01 Good afternoon, and welcome to the PHAROS ENERGY PLC investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and could be submitted at any time via the q and a tab situated on the right hand corner of your screen. Simply type in your questions and press send. The company may not be in a position to answer every question it received during the meeting itself. However, the company will review all questions submitted today and publish responses where it is appropriate to do so. Before we begin, I'd like to submit the following poll. I'd now like to hand you over to Jan Brown, CEO. Good afternoon.

0:33 Good afternoon everybody and thanks for joining us. I'm Jan Brown's CEO and with me presenting today are Sue Rivet, our CFO Mohammad Syed, our Group Head of Technical who unfortunately has a technical issue so we can hear him but we will not be able to see him and Minan Nguyen who is our IR Analyst and lead on our ESG team. So without further ado let's get into the slide deck, slide four please. So this team has been enrolled for just over a year now and we've had a few strategic priorities that we have been focused on: resetting the strategy, repositioning the portfolio, restoring the balance sheet resilience, establishing our net zero commitment and reinstating regular shareholder returns.

1:30 So looking at each of these in turn, the strategy has been agreed by the new board and communicated widely at the interims last year and what we're offering is growth and regular shareholder returns. Now looking at the portfolio, we have concentrated on the quick wins so for example there's a number of low cost relatively low risk opportunities in Egypt which in the success case could be monetised very quickly, and we've also concentrated on the higher value items in the portfolio, for example the TGT field in Vietnam where we achieved net backs of $50 per barrel last year.

2:17 We started the year, March last year, with the completion of our farm out of Egypt which is now non operated and the most important thing that we've been working on this year is progressing and maturing the exploration prospects in 125 in Vietnam and you'll be hearing a lot more of that later. The balance sheet Sue will talk to you about this it's in good health. We have had a series of cost cuts, we've reshaped the organisation, we've pared back the board and the combination of that plus the Egyptian work programme being fully carried through to about Q3 this year means that our balance sheet is in really good shape.

3:05 Last September we announced our commitment to net zero and Monaan will run through where we are on that in her section. And finally, the reinstatement of regular shareholder returns. We started a buyback programme last July, 3,000,000 allocated in 2022 and a further $3,000,000 was committed in January of this year. In September last year we announced the framework and policy for our dividends and last week we announced the dividend of 1p per share which will be put to the AGM in May. Throughout all of these what we are looking for is sustainability and a combination of cash flow and longer term value.

3:58 So with all that work done, we have rebuilt the foundations, we're now on firmer grounds and we're put in the right position to look at how we best generate cash flow, first and foremost from our own portfolio, but it also allows us to look more broadly at how we can drive value for all our shareholders from not just assets in our own portfolio but further afield. No asset in our portfolio has sacred cow status we are not afraid to monetise at the right time and indeed both the company and the management team has a track record of doing exactly that. We have an approach to capital allocation which is flexible and aims to balance those two priorities in the strategy: the near term cash flow which funds the regular shareholder returns, plus the longer term value which fuels the growth.

4:57 So with that introduction I will hand over to Sue who will talk through the finances. Hi there, thanks Jan. My name is Sue Rivett. I've been with the company about seven years. I took over as CFO in July 21 and I've been in the energy business for about forty years, so just to give you a bit of who I am. In terms of the business, so 2022 was a good year as Jan said, so basically bringing that balance sheet resilience back. So it's been restored. Revenues were up 35% to £222,000,000 and the net debt position down 50%, so a modest net debt at just under I'm not going to go through everything on this slide, but I will draw your attention to the Egyptian receivables position.

5:57 Those who follow Egypt will know that there's been issues in country with the macroeconomic

6:04 environment there. Sorry I can't get my words out. So our Egyptian receivables has increased. It's gone up to 24,200,000 at the end of twenty twenty two. It is a US dollar receivable. If we wanted to take Egyptian pounds we could take that tomorrow, but the Egyptian pound has been devaluing considerably in 2022 and continues in 2023. So much better that we sit on a US dollar receivable and look forward to taking that in the future. I should also point out that £7,000,000 of that includes a catch up invoice. We were able to get improved fiscal terms on the assets there and so that's a catch up invoice, a one off.

6:56 And I should also point to the fact that we have a facility with the National Bank of Egypt. It's up to 18,000,000 and it allows us to draw up to 60% of our invoices there in US dollars. So it's a very good facility in terms of working capital movement. Also the IMF came into country at the end of twenty twenty two. We're starting to see small implications in 2023 of that $3,000,000,000 that was pledged at that point. We're also starting to see privatisation being initiated by the Egyptian government with the thought that that will raise something in the region of $8,000,000,000 and there are other initiatives.

7:49 When we took over the assets in March 2019, the receivable balance at that point was £30,800,000 The team worked hard to get that down to just under £7,000,000 and obviously that's now popped up. So I think the key is that EGPC have always paid their debts down but it has been a cyclical thing that we've seen before. So I think it requires a certain amount of patience in terms of getting the recovery of that US dollars. Vinan, if we could kindly move to the next slide please. Thank you. I'm just going to pick up on a couple of points here. So cash position improved considerably to £45,000,000 at the end of the year.

8:37 I'll draw your attention to the 31,900,000 there which is for the capital investment in both Vietnam and in Egypt and right in the middle there the 16.7 and the 27.1 that's the in and outflows of essentially that National Bank of Egypt loan and also the RBL which we have over our Vietnam assets. And with that if I could move to the next slide please. You. So just in terms of the net debt, as I said earlier modest net debt down 50% from prior year. I'll draw your attention to the operating cash flow, so over those four segments. That's important because that's the minimum base that we use for our dividend policy, as Jan mentioned.

9:28 So £130,000,000 basically coming in from cash flow from operations and obviously taxes paid there, taxes to the Vietnam government. With Egypt EGPC pay the taxes at that point. Also of point in there is the 18.1 which is the working capital. So that's us seeing the impact of the Egyptian receivables essentially in there. Also of note is the 18.4 in the middle there which is the funding from our partner in Egypt, so IPR, that's how much they've funded during 2022. And if I could move to the next slide. Thank you Manan.

10:17 Picking up on Jan's point, so returns to shareholders share buyback initiated $3,000,000 in July 22. We managed to satisfy that by January 23, so six months the program took. We're into a further $3,000,000 which we announced in January. In terms of the dividend, so operating cash flow minimum of 10%, we're announcing a 1p a share to go to the AGM in May and basically it's a 1p which is over the whole of the 22 accounts. Essentially what we will do from there on is we'll go to a normal dividend routine which will be an interim and then a final, so something to look forward to there. So roughly a 9 percent yield overall.

11:13 And if I could move to slide 10 please. Thank you, Mona. So in terms of 2023, that continued discipline that we applied to our capital management. So as Jan said, the balance sheet strengthening, improved liquidity and strong cash flow generation from our Vietnam assets. We have basically halved the staff and the board has gone from nine to six, so those G and A costs coming down considerably there. In terms of the allocation for 2023, share buyback programme and dividends, debt repayments probably in the region of £40,000,000 that's for National Bank of Egypt and the RBL facility there. That will fluctuate as obviously we have a redetermination process every six months so that changes. But that's roughly what we've got in the books at this point in time.

12:18 And a modest capital programme, pounds 22,000,000. It would be £37,000,000 but £15,000,000 of that is funded from IPRR, Egyptian partners. It's worth saying they do also fund the joint venture G and A and OPEX as well. Lots to look forward to in terms of them carrying us through. We also will have a contingent receipt of about £5,000,000 during the first half of this year as part of that original farm down deal and hopefully we can look forward to some improvements in the recovery of the receivable. I think a good year of 2022 but something really to look forward to in 2023.

13:09 And with that I'll hand over to my colleague, Mo.

13:13 So my name is Mohammad Syed. I'm the Group Head of Technical Workforce for the last three years and recently the General Manager of Egyptian Assets. Moving on. Yeah. Thank you, Yunal. So as you heard from Jan and Suk, it's an important year for Egypt 2022. We farmed down 55% of the business and our pay per share to ITR, who was an experienced operator in country, we were also able to secure a one drilling rig for a long term contract that provides a stable platform of activities, in a transition year we were able to deliver within the guidance as you can see in the two charts on the top and in the bottom, modest amount of activities, modest amount of content being deployed in the PHAROS ENERGY and we're able to stabilize the production around 3,000 barrels.

14:09 The other asset in Egypt is North Ballysuite which is currently under exploration and exploration phase and we just finished drilling the first well and the focus for 2022 was basically continue to identify low cost low risk exploration prospects, which I'm going to tell you a bit more about it in one of my slides and prepare the asset for two commitments for the small seismic survey in 2023 and again it comes in my next slide. So next slide please, Milan. Thank you. Okay, so our approach to investment in Egypt in 2023 is measured. We keep an eye on the receivable position and we have the flexibility with the uninsured assets to ramp up activity and ramp down which we have done successfully pre COVID and after COVID ramping up the production to 7,000 and ramp back down to maintain and preserve the balance sheet.

15:05 In my twenty years career I've seen at least two cycles of receivables building up and goes back down, one with BP with the receivable built up to a billion dollar plus and was cleared back down and with Merlin 50,000,000 to 30 when we did the acquisition PHAROS ENERGY PLC back down to around 7,000,000. The focus however in 2023 is led by commitment, we have two commitment exploration wells to drill in LRU which I'm going again to tell you about it in one of my slides and two commitment exploration wells in NBS, North Dimitriq and small seismic survey, so keep an eye on the receivables and then we act accordingly Away from the exploration commitment, we focus on bringing high value, low cost barrels

16:00 through waterflood recompletion. There are several zones in the wells, we generally complete one or two, so there are others already been discovered, sets behind pipe. So recompletion program is active in 2023. Next slide, please, Sorry. Before I leave this one,

16:20 Yes. So, I mean, we still have strong two p position, as you can see, 15,000,000 of two p after the PHAROS, so that's our 45% of the two p and a significant two c that there is a clear pathway to monetize the two c. And in my last slide, I'll explain a bit more about that. Next one, please. Thank you. Okay. So the focus for twenty one, twenty twenty two, I've pretty much told you most most about it. The key thing to note in this top gray bars is that in 2022 we were able to secure improved commercial terms, our contractor take went from 42% to 50.8% which is quite significant, improves the overall project economics and breakevens, and those are some of the best terms in country.

17:11 In 2023, as I said, the focus shift, we bring those exploration, I have a slightly tell you about the exploration, We have two shallow prospects to drill. The shallow prospects are not currently in the two p or in the two c. Those will be an additional value add, and they can can be tied up quickly. They're within existing infrastructure. So we drill them, we make a discovery, put them on production relatively quickly, and then gearing up to drill a deep well, which is potentially significant. So those deep reservoirs

17:51 are prolific in the Western Desert and have produced some of them with BP and quite significantly. So we're gearing up and firming up different prospects currently covered by three d seismic end of planning.

18:06 In NBS, like I said, we started drilling almost finished pretty much with the first commitment well and this three d seismic survey started and then the second well will come in later in the year. Next slide please, madam. Thank you. So this is my slide on the exploration starting with the map on the top, you can see a black dot and a red dot. The black dot is an existing Apache well and the red dot is the well that we're currently drilling the first commitment well. I think it's pretty encouraging, but the key risk around that particular prospect, is partially covered by three d seismic and the learning we have from El Paion will be applicable here which mainly around the vicious distribution and it could be depleted because of the production from the Apache side of things.

19:00 The map in the bottom shows you the two exploration prospects, shallow exploration prospects, that are surrounded by already existing oil fields, so on the right we have the West Indies and Green field with the black dots. So the first red dot on the right, this is West Anestelline extension. So we're looking at the extension of that existing producing field. The key rest there is the vicious distribution and, again, potentially depletion because of the production from the existing well. And then the second red dot is in

19:32 between two already producing oil fields and the structure well defined on seismic, the heat rest around it is that default C whether or not that fault is sealing. It's worth mentioning that our track record in exploration is about 58%, which is significant track record on in exploration on a three d seismic. Next slide, please. So this is my last slide in Egypt, that's how everything dovetails together, those are the key different projects that we work on as a team to further enhance and create value for our shareholders, starting from the green bars on the left, the ones at the bottom, we have produced 26,000,000 barrel of oil from the steel which is significant volume and you do not produce this amount from a small feed, copy factor is very low we sell significant 2P and 2C resources the 2P will be monetized through additional drilling roughly 60 wells for the field development plan with continuation of water flood and recompletions.

20:42 The 2C is about 20 to 25 additional wells, it's clear where we tell them and again it comes in with additional water flood and recompletions program. That's how we generate 2C2P production and money, that money we give it back to you in share returns, share buyback, cash returns and share buyback and reinvest in the asset and we have no shortage of great opportunities to reinvest in the asset. In Egypt, have infrastructure led exploration, we have two different types of exploration, we have conventional exploration which includes three different categories, the first category is the shallow structures which I've showed you two of them we plan to drill in 2023 and tie into production quickly and it's relatively cheap, so the dry hole cost in NDS or in Fajun is under $1,000,000 and the drill and complete is between 2 to $2,500,000, so relatively cheap. You can bring those barrels to production quickly and they're currently not in 2P or 2C and there's several similar channel structures have been mapped in the field, those two just the first of many that we've mapped on seismic.

21:57 The second type of conventional exploration is the deep which we have a deep reservoir prolific reservoir horizons produces elsewhere in the Western Desert between 12 to 14,000 foot and the third type is the northern area which is I know it's not very obvious on the map but there is a light blue outline and a yellow blue and yellow highlighted outline. So the northern area is the difference between the two, and the significance of that area is just offset to an existing major Apache field, current field, who

22:30 produced 100,000,000 barrel and stay going. So there's significant potential in the northern area that we cannot tap into yet because there is some military training ground that we we will fall the military well. And lastly, opening our production center in NDS, and and again, you can see the potential of NDS could be similar to Ukraine. Next slide, please. Okay, so now changing gears to talk about Vietnam, the Egypt part was pretty cheap onshore, flex up, flex down wells, is complementary to the Vietnamese assets, is mainly onshore, sorry, mainly offshore. And again, in 2022, before we get in 2022, one of the key things to note is we've been in country for over twenty five years, and the significance of that is two things, number one, we understand the regulation, we have strong relationship with our partners and number two is we understand the subsurface well, so looking at the map you can see our acreage position which highlighted with the circle, this is where we produced from in PGT and CND and those also started as an exploration position back in the day And the two rectangles are our existing exploration acreage in the Tokam Basin, which is surrounding by the deep hydrocarbon producing hydrocarbon basins.

24:03 And now I have more details to share with you on 01/25 and one twenty six exploration blocks trying to put things in perspective for you. So bear with me. I'll give you some more details for the first time on 01/25. Okay. Now shifting gears to the focus in 2022, we have been able to deliver within the guidance and we have done so at least for the last three years I have been involved with the project. In TGT we have drilled two wells on time under budget, you can see the production from the two wells in the green in the top chart with the two different green colors, second well came in slightly lower than expectations, but still positive economics and hindered back.

24:52 In in c c we'll draw the first lateral, which is very positive. We've seen the results of the lateral in 2023, and that was the first time to drill a lateral in MBS, which caused the way cost by about 50%. The 2022 focus for the team on the exploration block was mainly progress continue to progress lead to prospects and identify further leads and prospects in the shallow water next slide please thank you, I know I'm rushing through this question but I hope I'm allowing more time for you to ask as many questions as you want in the Q and A. Okay, in 2023 away from the operations there will be first no drilling in 2023 new drilling in PGT or CNV currently going through the revised wind field development plan approval cycle but what we will do is we will focus on bringing high value low cost production through surface and subsurface optimization which we do consistently so there's additional PERC water shutoff etc gas electrode in addition etc etc but away from the operations the team is focused on finalizing the license extensions for the two producing assets PGP and CNV and then a new update to the full treatment development plan post license extension it's worth mentioning that in the two producing assets we have strong position

26:22 with the 2P and the 2C and clear way to monetize both which I'm going to show you in my last slide in the big man section. The focus in 2023 because I'm not going to say this again on the exploration block number one, like I said continue to progress with the prospects, we have ongoing discussions with potential farm lease partner, any of which would be a good partner and they will bring more than just money to the table and unlucky their two years license extension on the exploration block and those have been submitted to PBM the regulator and the PBM recommended it to the prime minister for approval for the matter of well not there. Next slide please. Okay, so the first gray bars on the top that basically the focus of twenty one-twenty two which is mainly drill drill drill, we have the twenty nineteen full field development plan which calls for six wells in PGP that's all have been drilled and proof of concept on the lateral and same B which have been drilled successfully and seen encouraging results from the production from the lateral.

27:30 Down blue, the green bars, like I said, the focus in 2023 is the extension of the three different licenses and then drill kind of modest drilling in 2024 with two wells and one well and further update the development plan that comes in later and in the exploration block the gearing up and preparing for a definitive drilling for this potential drilling in 2024 for the right circumstances. Okay. My last slide on how things don't care together. Next slide, please, Munan. Thank you. So, again, in the same fashion, we start with the green bars in the bottom to the left. We have produced gross from the two assets in Vietnam, PGT and CNV, about 130,000,000 barrels, and we still have strong 2P and 2C position.

28:20 Again, we don't reduce those full volumes from small fields. The 2C component in Vietnam will be materialized through partially timing with the license extension and partially additional training and PGP takes about seven more seven more wells to come up to move to CT 2P. The 2P in Vietnam, the majority of it sits under the existing no further case. So majority of the TP can be materialized with the existing wells in the ground. That's again how we generate the money which give it back to you in dividends or share buyback, but even in Vietnam we still have some really good opportunities to invest that. I was in Vietnam in February, we discussed the license extensions, we'll discuss some of those infrastructure led exploration, they exist within reach of the infrastructure of the field and the beauty of those ILX opportunities is you spend the majority of the money on the drill debt.

29:19 And lastly, one twenty five exploration block and and, like, who knows what the potential is. It's quite I'll try to put things in perspective to you in the Q1, but it could be significant. Next slide, please. Okay. Switching gears, talking about the exploration blocks. For those of you who follow us this map should be fairly familiar for you and just to orient the new people looking at it for the first time, the gray the gray lines are the two d lines, the three d is highlighted in red and the different shapes that give you the different sizes of the prospects that we've mapped and the leads, and one to seven is different potential producing reservoir horizons, which are similar to where we produce from PGT.

30:09 Okay, next slide please. Thank you, Vinad. And in this slide, I'm trying to give you a perspective on resources. I cannot tell you the size of the prospects, at least not yet, because we're in the middle of the license extensions and the regulator in Vietnam would not allow us, so obviously we don't want to pass them off. However, we have an independent third party study ongoing right now with ERCE to basically try to publish those numbers which does not interfere with the license extension on our relationship with the regulator in country. Okay, with that said, on the left hand side you can see the map of the column basin which we produce from TGPC and B and a notable feature in there is the black hole field which is a famous field in the example of white fiber this field is a Valerian dial plus and you can see the area obviously area is not the major like the only factor determining the the volumetrics, but it's an important factor. So area wise, it's about a 100 kilometer.

31:16 You look at the cross, it's we've identified with e for with e, for example, is the one is one that we focus on. G as well and e, they're all significant areas. So, again, I'm trying to put things in perspective for you without being explicit with what the numbers are. So it's worth mentioning that the Foucaumb the column basin itself is proven to be a multi billion barrel generative basin. Okay. Next slide, please, ma'am. Thank you. So in the same fashion, I showed you on an earlier aerial perspective what the resources look like. Now on a seismic cross section, you can see an arbitrary line going through a to b. And in this exploration basin, especially when it's frontier, you wanna see some key components. One is the source drop, and you can see the sulci drop here highlighted in purple with s and different potential producing reservoir arginines which is highlighted with the r's and then the cab rock and a pathway for oil migration and as you can see on this map towards the point a, the prospect a, d and e, those are the three prospects that the team have been focused on and they have similar features to some of the really good assets I've worked on in the past.

32:34 Water depth wise prospect a is similar to Thunder Horse in Gulf Of Mexico, so you can see some of the similar features. Next slide, please, Ron. Thank you. So this is my last slide, and I'm just showing to you three key prospects that the team is working on. They're not the only prospects that the team is working on. The team is generating additional leads and prospects in the shallow water area, but these prospects roughly between 1,900 meter to 1,300 meter, but once we take the water depth out from seabed to the total well depth, it's similar to what we produce in the Kolam Basin with PGT. So an area, exciting time, an exciting area for us, That's all I can say at this moment. I'm happy to hand over to Nina.

33:26 Thank you, Mick. Afternoon, everyone. As Jan have briefly introduced in the beginning, I am Minan. I joined the company in 2019 as PHAROS investor relations analyst, and I'm also part of the company's ESG team. And today, I have just two ESG slides that I will now walk you through. So for those of you that have been following our story, this slide should be quite familiar to you. On this slide are the usual key ESG metrics that we track, which is what you would expect from a sustainable and responsible energy company. Now due to the interest of time, I'm not going to go through everything on this slide, but the point of this slide is to show that we are open and honest about our approach to ESG and ESG reporting.

34:22 And all of this data can be found in our annual reports, which will be published later in April and will also be available on our website. Moving on to the next slide. As Jan mentioned in her first slide in 2022 we made the commitment to achieve net zero on our scope one and scope two emissions across all of our assets by no later than 2050. It's worth noting that 2050 is a baseline date for us, meaning we will do what we can to try to accelerate and move this target earlier if possible. We're also working hard to develop a roadmap towards this net zero ambition, which will be published later in h two twenty twenty three. So one to look out for. Current considerations for the roadmap include setting a framework to reduce emissions across all of our assets, the targets we need to hit in order to achieve that 2050 goal, the estimated costs needed to get there, and how we can implement, manage, and monitor these technology.

35:23 We recognize the journey to net zero will not be straightforward with new ideas and new technologies constantly emerging to be tested, but we are committed to transparency and we will keep our stakeholders updated on our progress. And with that, I will now pass it back on to Jan. Thanks, Manav. Thanks, the team. So what you have heard and seen is that we have a solid balance sheet. We have robust cash flow from our assets in Vietnam particularly, and we have got catalysts for growth, most notably on Block 125 as Mo's outlined, which would be a great opportunity for any company but for one of our scale the leverage is quite significant.

36:13 So on the right hand side of the slide you see what the upcoming catalysts are for 2023. In Egypt, payment of the receivables or resumption of getting some dollar flow in from the government would be a game changer for us. We are cash flow neutral for this year largely as a result of the carry in the first contingent payment coming in from the deal terms, but it is disappointing that the appetite for investment is more muted because of this lack of dollar inflow and payment from the government. You've also heard about the first wells on the MBS block. The results of those will be coming through in the next month or so and progress to be made on the other parts of El Fayoum that have not yet been touched by drilling.

37:10 So moving to Vietnam, again on the producing assets the license extensions are routine but important to capture that additional 2C value that Mo talked about and to prolong the lives of what are essentially very high netback barrels coming out of these fields. The updated field development plans again routine going through the process and setting us up to resume drilling in 2024 and that means preparation work, lead time items etc in 2023. And then finally on block 125, the license extension I'll just repeat what Moor said this is way ahead of the other two.

37:58 The regulator has actually submitted a letter of recommendation to the Prime Minister that this license extension should be granted, which is really positive for us. And that means that in due course we'll be going ahead to source long lead time items and get that all important drillship needed for those deep water wells that Mo was highlighting. And finally, as you would expect, a huge amount of time and effort a huge amount of time and effort is focused on bringing in the right new partner. That's high on our agenda. Okay, now next slide please, Monaan. So finally, we have a clear roadmap to generate cash and create value for all our shareholders. We have a solid pipeline of projects ranging from the low cost, lower risk, fast to bring into production opportunities that you've heard about in Egypt and of course the basin opening play in Vietnam.

39:03 We, in all our capital allocation decisions, target either value or cash flow per share and it's all underpinned by the robust sustainable cash flows in Vietnam. We've also got the commitment to regular cash returns through the dividend formula, but also through the buyback programme that is ongoing. So all in all, what we're offering is an asymmetric value proposition of solid cash flow with a commitment to return a decent portion of that every year, plus substantial upside on a scale rarely seen in a company of our size. So that concludes the formal part of our presentation and I'll hand back to the IMC people to take us through to Q and A. Thank you all very much for your presentation this afternoon.

39:59 Ladies and gentlemen, please do continue to submit your questions using the Q and A tab situated on the top right hand corner of your screen. Just while the company take a few moments to review those questions submitted today, I'd like to remind you that recording of this presentation along with a copy of the slides and the published Q and A can be accessed via investor dashboard. As you can see, we have received a number of pre submitted questions along with live questions throughout today's presentation, and thank you to all investors for submitting their questions. Manan, could I please ask you to read out the questions and give responses where appropriate to do so, and I'll pick up from you at the end. Of course, thank you, Lily. I'll now read out the questions which were pre submitted to the company ahead of the event. The first question is, the return to dividend is welcome, but the 1P dividend is 60% less than the dividend paid the year before COVID.

40:45 Will the company consider special dividends? So I'll take that one. This was submitted in advance. So I've got unfortunately a lengthy response to this because there's quite a lot in the first sentence which is a statement before we move on to the question about special dividends. So if we look back, the last dividend before Covid was paid in 2019 and based on the operating cash flow of 2018, that operating cash flow was $56,000,000 so almost exactly the same as we achieved in '22, which is funding the 2023 dividend. Now in 2019 the total cost of the dividend that we paid out was £27,000,000 so around 50% of operating cash flow was paid out in dividend.

41:38 Right now what we are doing is balancing three things all the time: first of all our liquidity and our balance sheet resilience secondly return to shareholders and thirdly, investing in our asset base. The policy that we announced last September, which is the first policy that the company's actually had so we're trying to be clear and transparent about what the minimum payment will be says that there's a floor of 10% of operating cash flow to be distributed but of course that percentage can be flexed up. There's no ceiling on what percentage of operating cash flow that we would pay out. So in most circumstances there would not be a need for a special dividend, it would just form part of the ordinary dividend if we believed that there was more cash that we could allocate to the dividend part of the equation.

42:32 Right at this point in time a payout of 50% would divert cash away from our other priorities including the buyback programme, investment into our assets and I know from other questions that have been submitted that these are really important to our investors as well. So our aim is to ensure that the business is sustainable, to allow ongoing dividend payments, to be open and transparent about our plans for capital allocation so investors can make their own decisions about the company. Getting to the question part now, would we consider a special? If there was ever a level of excess cash which would merit a special, for example on an asset realisation, then we know that we have shareholders who are big fans of dividends and others who prefer buybacks and if we had those circumstances of excess cash then these preferences would be taken into consideration before we made any decisions about how best return capital to shareholders.

43:37 So hopefully that answers that question. I'm very happy for people to submit follow on questions and as I think we said earlier, as we did last time, if we don't get round to any question on this call which now has fourteen minutes left, we will provide written answers to them which will be posted on our website following that. Over to you, Min Ann. Thank you Jan. The next pre submitted question: Good to finally see the long overdue downsizing and cost cutting take place. The company's G and A is still higher than other producers with a 5,000 to 10,000 BOPD production base. Do you not think that further reductions are necessary, at least until there has been some production growth or share value appreciation?

44:24 Thanks Manon, I'll take that. So in terms of the overhead obviously it continues to remain a focus as you would expect for the group, so an ongoing focus even though we've been through quite a big programme. So we restructured the Egyptian business in 2022, obviously with that farm down to IPR and essentially we've halved the number of staff on the books and also we've taken the board from nine to six. Quite a considerable decrease over a period of time. In 2020 for instance the G and A was something just under 15,000,000 and as you'll see from the results, 2022 is down to 10,000,000 and we're forecasting that to go down a little bit further to 9,500,000 for 2023.

45:29 I should say this is all against the backdrop of inflationary pressures throughout the globe. Hopefully that answers the question and I'll pass back to you Mina. Thank you Sue. Moving on to Egypt questions. Despite two years of IPR expertise and funding, Egypt is still only expected to produce thirteen fifty BOPD net. How can we get out of this situation? Has the company considered selling it and moving on? Okay, I'll take that one. Look, we are frustrated at the pace of the ramp up and I am well aware that IPR is too. The oil is in the ground every year, the 2P reserves have been certified through the CPR process and in twenty nineteen-twenty twenty we proved that what's needed to get out with attractive net backs is continuous investment to get production levels up and the cost per barrel down.

46:29 We're not here today to make excuses for the slow ramp up but no one foresaw the pressures that would be put on the Egyptian economy following the onset of the war in Ukraine. And you've heard about the receivable situation and that clearly has muted the appetite for investment given lengthy payback periods that the industry is now experiencing and it's not unique to us, is across the industry in Egypt. Whilst it's frustrating, on the plus side the oil is not going anywhere. We have these licenses long term out to 2034. You've heard the resumption of payment of the receivables would be a game changer and Sue's talked about some of the inflows coming into the Egyptian economy to spur that on.

47:21 So the availability of dollars when that comes about again will reopen that appetite to invest and again you've heard from more about the range of investment opportunities in Egypt low cost, relatively low risk can be brought quickly onto production. Frustrating but a lot to play for with some real value catalysts. But it's important to be clear that as I said earlier in the presentation, we're not wedded to any of our assets and the board always reviews and keeps under review the role of each asset in the portfolio. And we take into account the return on capital, the cash generation potential, costs, growth, strategic fits and if any asset did not perform and we thought that there was a chance of a reasonable realisation then that would be on the sales block. And if you look at the track record of the company, there's a strong track record of monetising assets at the right time.

48:25 So in Egypt we're fully carried for the next six months work programme, so as I said earlier, cash flow neutral this year. A lot of growth to go after and it needs these incentive packages coming in to provide dollars into the Egyptian economy to really kick start the next phase of the investment. Again, hope that's answered your question, but if there's any follow ons, we will be happy to answer them as well. Thank you, Jan. Next question is in regards to IPR. The company said the IPR free carry will be utilised by H2 twenty twenty three. Can you please clarify Egypt funding plans beyond H2 twenty twenty three as the asset does not produce sufficient free cash flow to fund itself?

49:15 Yeah, I'll take that, Manan. Sorry. Sorry, flipping the camera on and off. So yes, as Jan mentioned previously, obviously we've got that carry through. Essentially it will be through to third quarter and it covers not only the CapEx costs but also the joint venture G and A and OpEx. We also have that £5,000,000 coming in for the contingent consideration, that's part of the original deal based on the Brent price.

50:05 And we can expect that to come through for the next three years, providing the price is there. Additionally we should expect to see some US dollars coming through in the period. We are getting small US dollars through monthly but obviously if we can get some resurrection of that receivables position then obviously we'll have a much better position. 2023 will be pretty neutral as I think Jan mentioned earlier. With that I'll hand back to you Mana.

50:50 Thank you Sue. Switching gears to Vietnam, I think this one is probably for you Mo. The question is what is the reason behind the lack of budget approval for drilling new wells in Vietnam? Is it simply a case of poor planning or the good old lack of alignment with Petro Vietnam? As Mo knows, if we don't drill, we cannot convert 2P to cash flow and cannot convert 2C to 2P. Will the company be able to address this issue this year so that we can stave off the inevitable production decline? Yeah. Thank you. That's a good question. So starting with, it's not just about the budget approval. So we have the budget approval cycle. But more importantly, it's the process that all that everything needs to go through in the plan to make sure that the drilling includes all the relevant information.

51:40 So no activity can be undertaken. It's not included in an approved routine development plan. So the revised routine development plan from 2019 in PGT was approved in 2020, which called for a six month, and they all have been dry by 2022. In CNV, we have the RGP approved in 2022 and the LateralX approach. We're working on this update of the FDT for PGCV. It's important to include the result of the last two wells that were dred in 2022, which were put on production in October and November. The reason it's important because with the new results from the recently drilled well late in 2022, we can optimize the future well locations and we can have a better protection from the simulation model of the performance of the new ones, which have been completed so that full field robust full field development plan for TCT have been submitted and approved by partners and have been submitted to PBM, the regulator, and we had the first discussion with the regulator. We'll now push it to the Ministry of the MOIT for further approval and additional discussion. So the TGT part is done. The CNV, as I've mentioned, the lateral was finished running in 2023.

53:02 We put it on production in February, so we are now incorporating the positive results from the lateral into the existing simulation model and update that between the build on plan. There are ongoing discussions with the partners. So it may take a little bit longer to get the FDPR foreseen data. In terms of how we deal with that in terms of the clients, so first of all, we are gearing up to drill early in 2024 with the TGT wells. And in 2023, we continue to focus on those high value low cost balance I've mentioned. They will comment through additional filtration, water shut off, gas lift optimization, and surface optimization. So those are some of the key activities we're working on in 2023 to sustain the production level.

53:56 Thank you, Mo. Just another question in Vietnam. Could you share the latest update on the revised field development plan application for license extension at TGT and CNV. Where are these plans expected to be firmed? Sure. I'll this one too. So I've mentioned the PGT free field development plan is submitted to partner approved PBL discussed MOIT now further discover a discussion and approval so that's progressing on the line the CNV as I said incorporating the lateral results so that come out in 2023 and then in terms of the five years extension, the the extension I was in Vietnam in February, we discussed the extension which by the way we're applying for it well ahead of time so the license does not expire until 2026.

54:47 Okay. So we applied for it ahead of time because we can see further drilling that will enhance with the additional extension. So we we discussed the extension. We discussed several opportunities for those ILS operation exploration we've talked about, but the extension itself has in principle been agreed with all different partners, have been formally approved by EVP, the national oil company, have been approved by PHAROS, and because it's right now working its way through PTT approval cycle and it just takes a little bit of time, you know, how it is in Southeast Asia and France. So that's all I can say I can say on the extension in terms of when we expect them to be firmed up, I would say in 2023.

55:35 That's very helpful. Thank you, Mo. The next question I have is there are two additional wells planned at TGT and one additional well at CNV. What is the breakeven price per barrel of oil for these? Are these the final wells to be drilled at TGT CNV or are there more potential drilling opportunities in the future? Okay. I think that I answered part of it on the previous question. Basically, we have a if you call it a mini field development plan ongoing now with the two wells and potentially a well in same deep to PGT. And that just carry us through as we get the extension finalized. Once we get the extension, we expect to get an updated revised 15 development plan in which we expect the additional drilling of new wells and pipe tracks.

56:24 Some of them are dependent on the extensions. Some of them are not. So that's in terms of future extensions. In terms of netback achieved in 2022, we were able to achieve $50 per barrel in 2022. Great. Thank you, Mo. The next question is back in 2018 when the FPSO charter at the TGT field was first extended, the company saw a reduced lease rate. Will the company see any further savings in the lease rate when extending the charter of the FPSO at the TGT field, which is due to expire in December 2024? Yeah. Again, it's good. I'm excited with a lot of interest in the operations, so I'll take this question. So I would say unlikely in the existing license term, we see improvement on the glomerular cost, but we expect negotiation in the, for the extended license period. We should see more comfort with the rate.

57:26 Just to summarize, unlikely to see significant change during the TGT license term, which is 2026, but we expect the sheet to for the extended license period, which is from '26 onward, and you should see competitive. Fantastic. Thank you, Mo. Just I'm just wary of time as it is now 4PM. So I think we do have time for one more question. The question is, have you had any discussion with a significant shareholder who has recently acquired over 6% of the issued share capital? Are you aware of his intentions and plans? Hi, I'll take that one. Look, we have an active dialogue with all of our shareholders and we have quite a number who are around about that same percentage rate.

58:17 I think I know the individual that you're referencing and indeed we had the normal prelims roadshow with him yesterday. So we listen to our shareholders, we welcome all constructive feedback that's focused on driving shareholder value for all of our shareholders. I'm sorry that the pre submitted questions have taken up all the live air time that we've got, we do commit to responding to every single question that's submitted and we'll do that as quickly as we possibly can. But with that I'll hand back to the company. Thank you all and I think you addressed all those questions you can from investors and of course the company will review all questions submitted today and we will publish those responses on the Investor Investor Meet company platform.

59:07 Before redirecting investors to provide you with their feedback, which I know is particularly important to the company, Jan could I please just ask you for a few closing comments? So hopefully what you've heard today is that we are offering protection of the downside, robust cash flows with a commitment to return regularly, a portion of those to shareholders, but with significant upside on a scale that is rarely seen in a company of our size. So we've got a well managed balance sheet, we've got a range of opportunities in the portfolio, but in particular Block 125 is a standout for us. So thank you all for your interest, we will reply to your questions, they'll be on the IMC website but also on our own and with that we'll say goodbye.

59:56 Thank you all for updating investors today. Could I please ask investors not to close this session as you'll now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations. This will only take a few moments to complete and I'm sure will be greatly valued by the company. On behalf of the management team of PHAROS ENERGY PLC, we'd like to thank you for attending today's presentation. Good afternoon to you all.