Pharos Energy has put on hold all development work in Egypt, which will lead production to decline.
While for the moment guidance remains unchanged from forecasts in May, the company has said that significant delays could “have a disproportionate impact on the length of time it takes to increase production levels to previous rates”.
As such, it intends to begin spending again as soon as possible. Pharos, previously known as Soco International, intends to use cash flow from its Vietnamese assets to support its Egyptian plans.
Capital expenditure for 2020 has been reduced to $37 million, from $44mn. This has been driven by reductions in Egypt. Revenues for the first half of the year reached $56mn, plus $21mn from hedging.
Output in the first half from Egypt was 5,979 barrels per day of oil, with output over the year expected to be 5,000-6,000 bpd. Vietnamese production was 6,114 boepd, with the year forecast to be 5,500-6,500 boepd.
One bright spot in Egypt is that receivables have declined to around $8 million, as of the end of June, down from $14.3mn at the beginning of the year.
Work in Egypt will focus on optimising water flood work and well spacing, when drilling restarts. The aim is to achieve secondary recovery at the El Fayum fields of around 24%, in line with previous targets. Primary recovery is 8-12%.
In Vietnam, production from the TGT field is expected to increase incrementally in the third quarter. Partners on the field have filed a full field development plan, with six production wells planned for 2021, with the government authorities.
Covid-19 has had an impact on the timetable, Pharos said.
