Pharos Energy (LON:PHAR) outlined progress on balance sheet strength, operational delivery in Vietnam, and an improving backdrop in Egypt during its preliminary results presentation, while emphasizing plans to increase scale through additional assets and continued work on its high-impact exploration portfolio.
2025 financial performance and cash position
Finance leadership described 2025 as a “strong set of results,” reporting revenue of $115 million alongside a cash flow from operations of $55.6 million. The company ended the year with $40 million in cash, helped by a one-off $20 million payment received from EGPC on December 31, 2025 that also supported the year-end liquidity position.
Dividends, capital allocation, and hedging
Management announced a 10% increase in dividends, citing confidence supported in part by the year-end Egyptian payment. However, the company cautioned that dividend increases are not automatic and are assessed annually as part of capital allocation decisions.
Pharos reiterated that it evaluates shareholder returns through multiple mechanisms, including dividends and share buybacks, but stressed the need to reinvest to offset natural decline in producing assets. CEO Katherine Roe said the prior decision to discontinue a buyback was driven by a preference to deploy capital into the asset base at that time rather than by any reduced commitment to shareholder returns.
On hedging, management emphasized that Pharos is not required to hedge due to the absence of reserve-based lending. Instead, the company uses hedging as “protection” for the balance sheet while retaining commodity price upside. At the time of the presentation, Pharos said it had hedged 24% of 2026 volumes and 7% into the first half of 2027, with management considering whether to add incremental hedging depending on market conditions. The company said it has “traditionally” operated with 20% to 30% of volumes hedged, leaving the remainder exposed to market prices.
Vietnam: six-well program and appraisal updates
In Vietnam, Roe said license extensions secured at the end of 2024 for the TGT and CNV producing fields enabled the company’s largest investment campaign in the country since original development. Management described a six-well offshore drilling program as being on time and on budget, with completion targeted in the first half of 2026 for remaining capital spend associated with the program.
Operationally, the company said five of six wells in the program had been drilled at the time of the call. Pharos reported that:
- Three TGT infill wells were producing and on stream.
- One CNV infill well was producing and on stream.
- The TGT appraisal well had finished drilling and was undergoing detailed testing, with results expected after another 3–4 weeks and an anticipated market update toward the end of April.
- The CNV commitment appraisal well had just commenced drilling, with management expecting 4–5 weeks of drilling before initial results.
Management said successful appraisal outcomes could support incremental production growth, previously referenced as around 20% above the level needed to arrest natural decline. Pharos also noted that it expects to spend the third quarter assessing appraisal results to determine whether additional development can be pursued economically.
Roe added that all Vietnam oil is sold domestically and that the company receives a premium to Brent. She also said Vietnam operations have seen no disruption from Middle East conflict dynamics and that the company has been encouraged to increase volumes where possible to meet demand.
Egypt: receivables recovery, new concession terms, and 6-well plan
In Egypt, Pharos highlighted a shift toward a more investable environment after reaching agreement to consolidate two existing licenses into one new concession with improved fiscal terms. Roe said the consolidation was concluded in September and was agreed with a retroactive effective date of October 5, allowing the company to benefit from improved terms before formal government ratification, which is expected during 2026.
A central focus was the reduction of Egyptian receivables. Pharos said receivables were reduced to $7.4 million at year-end and had fallen further to approximately $6.1 million at the time of the presentation. Management also cited public statements by EGPC indicating an expectation to pay all outstanding debt by the second quarter, which the company said would move receivables toward “normal” commercial levels (roughly a month in arrears).
With improved economics and greater payment visibility, Pharos said it agreed a six-well work program with partner IPR. The company indicated that a drilling rig had been identified for the first well and that drilling was expected to start shortly. Roe said the company would like to trend toward the upper end of its production guidance in Egypt, but that it would require increased activity compared with the prior year, when production was described as relatively stable at about 1,300 barrels per day.
Growth strategy and exploration priorities
Roe said Pharos is now looking to add assets to the portfolio to increase scale, stating the company does not want to remain a “5,000 to 6,000 barrel a day business” over the medium term and is targeting “10 and beyond.” She said the company is assessing opportunities and remains open-minded on structure, including acquisitions or other combinations, but is focused on near-term producing assets rather than heavy development projects or high-risk exploration, given the company already has “high-impact” exploration exposure in Vietnam.
On Vietnam exploration, Pharos discussed its frontier deepwater position in Blocks 125 and 126, noting it secured a two-year license extension in June and has initiated a structured partner process. Roe said there are “a number” of companies under NDA reviewing technical data and that discussions are progressing through technical and commercial workstreams, but added that these processes take time and the company will update the market when it has a tangible outcome to share.
Addressing geopolitical questions, management said operations in both Egypt and Vietnam have continued without disruption, with Egypt’s oil trucked as usual and Vietnam volumes sold domestically without export constraints or imposed redirection. Roe also said energy security considerations in Egypt are increasing the government’s focus on paying receivables in order to encourage reinvestment by international operators.
About Pharos Energy (LON:PHAR)
Pharos Energy is an independent oil and gas exploration and production company with a focus on sustainable growth and returns to stakeholders.
Pharos is listed on the London Stock Exchange, we have production, development and exploration interests in Egypt, Israel and Vietnam.
