Pharos Energy

Pharos has announced that, together with IPR Lake Qarun Company (“IPR”), it has entered into a non-binding Memorandum of Understanding (“MOU”) with the Egyptian General Petroleum Corporation (“EGPC”) in relation to the merger of the El Fayum and North Beni Suef Concession Agreements.

As previously announced, IPR and Pharos, in their capacity as the Contractor parties under the Concession Agreements, submitted a request to EGPC to merge the two assets and replace them with a new consolidated Concession Agreement. The consolidated Concession Agreement is expected to unlock significant value in the Western Desert by improving certain fiscal terms, extending the term of the concessions and committing the Contractor parties to additional work programmes aimed at increasing production from the areas.

Under the MOU, EGPC and the Contractor parties agree to use their best efforts to conclude negotiations on the new consolidated Concession Agreement as soon as possible, with a view to the agreement receiving government and parliament approval and then being signed by all parties at the earliest opportunity. Further updates will be provided to the market in due course.

Katherine Roe, Chief Executive Officer, commented:
“The signing of the MOU is a key milestone in the PSC consolidation process, and one that the team have been working towards for many months. Thank you to EGPC and our partner IPR for their continued support and close cooperation in helping achieve this mutually beneficial agreement.

“A new consolidated Concession Agreement and improved fiscal terms are key to further organic growth in our existing Egyptian portfolio and in turn generating significant value for shareholders. We will continue to work closely with all parties with the aim of completing negotiations as soon as possible.”

Whilst this was something that had been flagged by the company it is indeed excellent news that the MOU has been signed but perhaps even more exciting is that I understand that all parties, including IPR and EGPC are ‘well advanced’ in terms of discussions with regard to the terms of the consolidation. 

Having visited the country and met with EGPC it is refreshing to see them motivated to conclude the agreement in good time, this demonstrates that the excellent relationship Pharos has in-country  as well as the general positive sentiment of the new Minister who has a strong mandate to encourage investment in the energy sector. Good news all round for Pharos at the moment and I’m very happy to see a bucket List stock in such good nick.  

Challenger Energy Group

Yesterday’s detailed presentation from a very full turnout from both company and London analysts didn’t add anything to what is already a very solid story but it is hard not to get excited about what is rapidly becoming the story du jour.

Added to that, this morning the company has noted that Morgan Stanley International has increased its stake by over 1% to 6.125% which is very good news for the company ahead of a US roadshow and should US investors follow Robert Bose and Charlestown into CEG then the share will move upwards rapidly. I’m not changing my 25p TP yet but the risk is without doubt that it looks a bit light…

Afentra

Afentra plc has provided an update on the latest Competent Person’s Report (CPR) for Block 3/05, conducted by ERC Equipoise Ltd (ERCE).

As of 31 December 2024, total net 2P working interest reserves stand at 34.2 million barrels of oil (mmbo), (gross 114 mmbo). Since the previous CPR in June 2023, gross production of approximately 11 mmbo was offset by a gross increase in reserves of 15.4 mmbo resulting in a reserve replacement ratio of 140% over the 18-month period.

Contingent resources on Block 3/05 have also increased since the last CPR with net working interest 2C resources of 13.8 mmbo (gross 46 mmbo). In addition, management currently estimates1 Block 3/05A net 2C resources at 7.1 mmbo (gross 33 mmbo).

Since Afentra’s first CPR in March 2022, 19.4 mmbo has been produced yet gross 2P reserves have remained broadly stable, 114 mmbo compared to 115 mmbo in March 2022. This early reserves performance, prior to any rig activity, reflects the significant potential of the Block 3/05 assets to sustain and replenish reserves. With rig activity planned to start in 2026, and the planned development of Block 3/05A, we expect to build on this strong initial performance to deliver significant production and reserves growth which will be sustained for many years to come.

Paul McDade, CEO of Afentra, commented:
“The latest CPR reaffirms the significant potential of Block 3/05. Delivering such high reserves replacement prior to any rig activities or the development of the significant discoveries in Block 3/05A underscores the long-term value of these assets and our belief that the production on these assets can be materially increased.

Our focus remains on working with and supporting the Block 3/05 and 3/05A partnership to maximize production and recovery while driving cashflow generation and value creation.”

Investors have rightly been positive about the Block 3/05 acquisition and this reserve replacement number confirms that bullishness and I would certainly believe that there is significant upside for Afentra. 

Block 3/05 Reserve Summary

(1) To date, resource estimates for Block 3/05A are based on management estimates and have not yet been independently audited.
(2) Net Entitlement Reserves are the portion of future production (and thus resources) legally accruing to Afentra under the terms of the production contract and expenditure and oil price assumptions.
(3) Working interest reserves have been calculated as 30% of the gross reserves for comparison purposes.

Original article   l   KeyFacts Energy Industry Directory: Malcy's Blog