Pharos Energy plc

Good afternoon and welcome to the Faros Energy PLC investor presentation. Throughout this recorded presentation, investors will be in listen-only mode. Questions are encouraged and can be submitted at any time via the Q&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 receives during the meeting itself. However, the company can review all questions submitted today and publish responses where it's appropriate to do so. Before we begin, I'd like to submit the following poll. I'd now like to hand you over to Catherine Rowe, CEO. Good morning.

Thank you, Lillian. Good afternoon, everybody. Thank you for taking the time to join our presentation today. Busy time with results, so we appreciate you taking the time. We will be running through a short presentation to deliver some of the key things that we've been working on, the catalysts moving forward, what shareholders and investors have to look forward to, as well as the performance for the first half of this year. So good afternoon and welcome again. I'd like to start with a bit of an overview. We've set here a year of strategic operational and financial delivery. Obviously, first and foremost, this is the first half interim results presentation. But I joined as CEO last year and presented my first set of interim results this time last year and we are here today as my second set. So I thought it might just be helpful to start off with a recap on what we've achieved in that timeframe. I think for those of you that joined last year, we were very clear about the near-term priorities and focus for our business in terms of what we needed to achieve with the existing assets. So on the left-hand side here, we just recap on those. We have two jurisdictions, with producing assets in both Vietnam and Egypt. We have exploration potential in both of those jurisdictions as well. Vietnam is the producer of the majority of our production, is the core part of our business, and it was really critical that we secured those license extensions for our two producing fields, and those were achieved in December last year. What's really important about that is the unlocking of a significant work program that we are about to commence in the coming weeks in Vietnam, not just to arrest the natural decline of these assets, but also to try to deliver incremental production volumes and growth from next year onwards. We'll come on a little bit more later in the presentation on that drilling campaign. In Vietnam, we also have high-impact frontier exploration. Some of you may be aware of this. We've discussed before in blocks 125, 126. This is deepwater offshore frontier exploration. And we also achieved a two-year license extension, which gives us until the end of 2027. Why is that important? Because we really need to seek a farming partner in order to give us the ability to drill our first prospect, which we would ideally like to do next year. We've put ourselves in the best possible position to do that. We've started a new structured formal process, partially to feed in some of the historic bilateral conversations, but also to attract some fresh interest. And we have also managed to secure long lead items and that two year extension to provide maximum optionality to find a partner. So that was also achieved, that extension was granted to us in June of this year. Just announced yesterday, we have successfully agreed new fiscal terms for our existing licences in Egypt. We have far better economics, far better improved terms and importantly, additional time on those licenses by consolidating into one new fresh agreement. You'll see here that's given us an immediate uplift in value. We have a 25% uplift in TP, largely a function of that additional time on the licenses. And again, importantly, going forward, it means a very healthy and attractive financial framework for further reinvestment, which we haven't been doing so far this year. We're also important to us to achieve the strength in our balance sheet after many years of having to service that legacy RBL facility. That was repaid last year. We remain debt-free and building cash on the balance sheet, as Sue will come on to. Again, flexible financial and strategic optionality We have fully funded capital investment programmes from our internally generated free cash flow and obviously not having to service debt allows us even more flexibility. It also means we have a clean balance sheet which provides further flexibility going forward if we needed to leverage. Very important to us that we maintain the shareholder dividend. This has been part of our policy for some years. And we're now trying to strike the right balance between continuing that return to shareholders through the dividend whilst also trying to achieve a capital return by reinvesting back into our assets. We've also achieved a strengthening in the board. We appointed a new chairman to the board in June. That's received alignment with our major shareholders and is working well with the rest of the board. And there's alignment in terms of strategic progress of our business, what next? And that leads quite nicely into the right-hand side here of what is next? What do we have to look forward to? Where does the growth in our business come from? So really, really important in this six-world drilling campaign in Vietnam. It's the largest investment campaign that we've had into our existing assets since the original development. So really, really important. We believe it's capable of extracting and delivering additional value through those increased production from next year and beyond. We'll talk a little bit more about that. And as I mentioned, we also have this formal process ongoing for the expiration, which is again a new, fresh look at how best to find a partner to deliver, hopefully, a drilling campaign next year. Egypt, more non-core part of the business, but still equally valuable. Those new terms make a huge difference in terms of our economics and provide that attractive framework. We're now going to work with our partner in-country to put together the near-term drilling programme, and again, all designed to increase production from the existing volumes that we see today. It does remain an absolute priority for us at Pharos to see a material recovery in our existing receivable balance And Sue will talk a little bit about our current receivables position. And we are in discussions with EGPC, our government stakeholder, about seeing that materially reduced, giving us the confidence and the ability to reinvest, but only in a very disciplined and self-funded framework. I think having said all of that, we do still recognise that we need to add scale to our business. We're in very good shape. We've got lots to look forward to with organic growth, but we would also like to add to that. And we're now in the fortunate position that we're operationally and financially strong enough to look at additional opportunities that fit the strategy and can build additional scale. And that's very much a priority as we move forward. So I just wanted to set the scene with where we are, hand over to Sue. on some of the interim results and then come back.

Thank you. Thanks, Catherine. So just in terms of the first half, just some highlights there from the first half, as you say. So revenue, we were able to maintain our position there of just over 65 million for the first half, which compares very similar with 2024. That was actually despite a sort of $12 reduction in Brent price in the period. And really that revenue has been maintained because we were able to bring in some of our inventory that we held at the year end. So that inventory supporting the revenue number there. In terms of the net cash, again, a good build from first half 24. to 22.6 as we left the half year. Cash flow from operations, 16.1. That's down quite a bit from the 24 number. If you recall, in March 24, we received a one-off dollar payment, 10 million from EGPC. We didn't receive that in the first half this year. We are very much after that in the second half And we've just come back from Egypt, Catherine herself and our new chair. And we believe hopefully there is something coming very shortly into the second half there. So hopefully we'll prop up that in the second half. In terms of the hedging, despite having got rid of the or paid down the RBL, we still have a 26% hedging position there for the second half, just supporting... us with a floor of $60. So again, very helpful to have in our portfolio. In terms of the Egyptian receivables, 33.5 as we finished the half year. That's down since then as we've managed to collect a bit more receivables in this third quarter. So as I say, 5.6 in this quarter that we've just received. but we are hopeful that we will get a reasonable dollar amount in the coming month or two. And just to say, in terms of the production guidance, we've narrowed the guidance from five to, it was originally five, we brought that up, and it was originally six to, we brought that down. So just narrowing that guidance as we know more as we get towards the year end. And if we could move to the next slide. Thank you. So in terms of the cash flow itself, so 34 million in there from inflow from operations, of course, taxes to governments, which gets you down to the 16.1, which you mentioned, of the OCF. A modest capital programme in the first half, 8.2. Essentially, the big capital programme comes in the second half, as we start that drilling campaign, that six-world drilling campaign in Vietnam, which Catherine will pick up later. In terms of where we finish for free cash flow, so 7.5, we have had 0.7 in from the contingent consideration from our partner. There is a further 2.5 due from them which should come into the second half, so something to bring into the second half there. And if we could move to, in terms of shareholder returns, as you know, we're committed to the sustainable dividend for our shareholders there. We have announced a 10% increase in prior year dividends, so just under 0.4 per share, which will be paid in January. And just to say that the buyback, which we've been running for some time, completed in January and we haven't renewed that at this point. And with that I'll hand back to Catherine. Thank you Sue.