Pharos Energy is restructuring its management team, moving Jann Brown to CEO and Ed Storey focusing on Vietnam, as the company prepares to close its Egyptian farmout deal.
The agreement, with IPR Energy, covers the transfer of a 55% interest and the operation of the El Fayum and North Beni Suef concessions. Pharos said it would close the deal in the first quarter of this year.
Once the sale closes, Brown will become CEO and one of two executive directors, alongside CFO Sue Rivett. Brown joined Pharos in 2017 from Cairn Energy.
Storey has led Pharos since he joined the leading London market in 1997. He will continue as President of Vietnam for Pharos, a valuable source of production and revenue.
Mike Watts and Rob Gray are also set to leave the board. As a result, Pharos will reduce its board from nine directors to six.
Pharos acquired the Egyptian assets in 2019 from Merlon International for $136 million and the issuance of a 16.5% stake in itself.
The El Fayoum concession produces 3,318 barrels of oil per day, the entirety of Pharos' Egyptian production. Production peaked at about 7,000 b/d in April 2020, but with oil prices falling, Pharos has scaled back its drilling plans and initiated a farm-out process.
The company began a three-well development drilling program in November 2021 . It will complete this work in February.
IPR will pay up to $115 million for its 55% interest in the two licenses. This will consist of $5 million in cash and cover Pharos' share of costs up to $38.43 million. Additional payments of up to $20 million may be made each year from 2022 to 2025, depending on Brent oil prices.
Once IPR has concluded the agreement, it will begin a new drilling campaign. This is expected to begin in the first half of this year.
Egypt is also improving its fiscal conditions. Pharos said it expects the contractor's share of revenue to increase from 42% to 50% during full cost recovery. This incentive will reduce development break-even points.
Pharos, in collaboration with ERCE, has developed a plan to increase production to more than 10,000 b/d from El Fayoum within 24 months of the RPI agreement. This would involve drilling 57 new wells, including 48 producers and nine water injectors.