Dividend up 10% and balance sheet debt free – here is what Pharos Energy’s H1 2025 really says
Pharos Energy has posted a steady first half in a choppy oil market and nudged shareholder returns higher. The interim dividend is set at 0.3993 pence per share – up 10% year on year – underpinned by continued cash generation and a net cash position. Strategically, the big swing factor is Egypt, where newly approved consolidated terms are expected to lift 2P reserves by 25% from year-end 2024, while Vietnam gears up for a six-well campaign that targets growth from 2026.
Below I break down the numbers, the operational set-up, and why the next 12 months could be important for valuation.
Key numbers at a glance
| Metric | H1 2025 |
|---|---|
| Group production | 5,642 boepd net |
| – Vietnam | 4,183 boepd |
| – Egypt | 1,459 bopd |
| Revenue | $65.6m |
| Operating cash flow (OCF) | $16.1m |
| Cash generated from operations | $31.9m |
| Cash operating cost | $17.04/boe |
| Net cash | $22.6m (30 June 2025) |
| Statutory post-tax result | $(2.8)m loss |
| Business performance post-tax | $(2.2)m loss |
| Interim dividend declared | 0.3993 pence per share |
| Egypt receivables | $33.5m at 30 June; $5.6m received post period |
| 2025 production guidance | 5,200 – 6,000 boepd |
Operational set-up – Vietnam steady now, growth targeted from 2026
Vietnam fields TGT and CNV lining up a six-well campaign
Production in Vietnam averaged 4,183 boepd. No new wells were drilled in H1, but rig contracts are in place for a six-well programme starting in Q4 2025: three infill wells plus the TGT 18X appraisal, and one infill plus the CNV 5X-L1 appraisal. The plan is to de-risk undrilled parts of both fields – the western area at TGT and the northern area at CNV – with flexibility for optional appraisal wells if results merit it.
3D seismic reprocessing has been completed on both assets, which should tighten subsurface models before the drill bit turns. Management guide that volumes from this programme are expected to flow through in 2026 and beyond. In short, 2025 is a preparation year; 2026 is the impact year.
Vietnam exploration – farm-out process active and PSC extension secured
On Blocks 125 & 126, Pharos has secured a two-year extension to the PSC Exploration Period to 8 November 2027 and has appointed an adviser to run a formal farm-in process. Long-lead items have been ordered to preserve options on timing. The company is clearly positioning these blocks for partner capital while keeping momentum on drilling readiness.
Egypt – improved fiscal terms and a material reserves uplift
The headline development is the approval from EGPC for a consolidated concession covering El Fayum and North Beni Suef, with three new exploration areas included. Pharos keeps a 45% working interest and IPR remains operator with 55%.
Why it matters: based on the Competent Person’s Reports at 31 December 2024, the new terms are expected to move c. 3.1 MMstb from contingent resources into 2P reserves – a 25% increase from year-end 2024, net to Pharos. The new terms start imminently, although full ratification by the Egyptian Parliament is still expected in late 2025 or early 2026.
Operationally, El Fayum’s East Saad-1X, a February discovery, came onstream from 1 July and a two-well programme is planned for Q4. On NBS, processing of c.130 km² of 3D seismic is progressing with interpretation to follow.
Financials – revenues resilient despite lower oil prices
Sales volumes did the heavy lifting
Group revenue held at $65.6m, essentially flat year on year, even though the average realised oil and gas price fell to $68.48/boe. The difference was sales volumes – up 13% thanks to additional cargo liftings from Vietnam inventories. Vietnam revenue was $56.2m with an average realised crude price of $77.25/bbl including a $5.67/bbl premium to Brent. Egypt revenue was $9.4m, reflecting an average realised price of $65.85/bbl after EGPC-set discounts.
Costs under control, but taxes and lower prices hit profits
- Cash operating costs were $17.04/boe, essentially unchanged.
- DD&A eased to $21.8m as volumes dipped slightly.
- The bottom line was a post-tax loss of $(2.8)m, driven in part by a $13.3m tax charge, mainly in Vietnam’s 50% regime, and lower commodity prices.
Crucially, the balance sheet remained strong and debt free, with $22.6m net cash at period end. Operating cash flow of $16.1m funded ongoing work and dividends. The dividend framework remains to return no less than 10% of OCF each year, split between an interim (January) and final (July) payment.
Receivables – still a watch point in Egypt
Egypt receivables stood at $33.5m at 30 June, with $5.5m received in H1 and a further $5.6m received post period as at 23 September 2025. Pharos continues a cautious capital allocation stance in Egypt until receivable recoveries improve.
Guidance, capex and hedging – 2025 is about set-up, not surge
- Production guidance narrowed to 5,200 – 6,000 boepd for 2025, reflecting steady Vietnam and softer Egypt.
- Forecast 2025 cash capex is c.$35m, with $8.2m spent in H1. About $22m linked to the Vietnam campaign will fall into H1 2026 as activity ramps.
- Hedging: 26% of H2 2025 oil entitlement is protected with zero-cost collars – average floor $61.3/bbl, ceiling $84.5/bbl. That puts a safety net under cash flows if prices wobble.
ESG and safety – good record, one incident addressed
The company reports a continued zero Lost Time Injury frequency rate in H1 across Vietnam and Egypt. A July truck incident in Egypt led to a spill of 178 barrels with no injuries; Pharos says the spill was cleaned with limited environmental impact and procedures have been tightened. Scope 1 and 2 emissions were flat year on year, with Egypt fields now connected to the national grid to lower diesel use.
My take – what’s positive, what needs watching
What looks positive
- Dividend increased 10% and a clean, debt-free balance sheet with $22.6m net cash gives flexibility.
- Vietnam drill programme is meaningful – six wells with appraisal upside that could move the needle in 2026.
- Egypt concession consolidation improves economics and is expected to lift 2P reserves by 25% from year-end 2024, net to Pharos – an important value signal.
- Cash costs held at $17.04/boe despite inflationary pressures.
What to monitor
- Egypt receivable collections – $33.5m is material; post-period receipts help, but the balance remains elevated.
- Commodity price sensitivity – realised prices fell notably versus last year; hedging softens but does not remove risk.
- Execution on Vietnam – rig schedules, appraisal results and conversion of optional wells will set the 2026 production trajectory.
- Parliamentary ratification in Egypt – terms “start imminently”, but full ratification is expected late 2025 or early 2026.
Investment view – steady today, catalysts queuing up
H1 shows a company doing the basics well: stable operations, contained costs and cash generation sufficient to fund a progressive dividend while staying debt free. The real upside, in my view, sits in two places. First, the Vietnam campaign that should feed 2026 volumes and potentially open new parts of TGT and CNV. Second, the improved fiscal terms in Egypt that are expected to add c. 3.1 MMstb to 2P reserves and refresh investment incentives.
Set against that are the familiar risks: receivable timing in Egypt, commodity prices, and operational delivery on the six-well programme. On balance, this reads as a disciplined, option-rich set-up for 2026, with a 2025 dividend uplift as a decent sweetener while we wait for the drill bit.
