Good afternoon, ladies and gentlemen, welcome to the Pharos Energy plc Interim Results Investor Presentation. Throughout this recorded presentation, investors will be in listen-only mode. Questions are encouraged. They can be submitted at any time using the Q&A tab situated on the right-hand corner of your screen. Please simply type in your question at any time and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all questions submitted today and publish responses where it's appropriate to do so. Before we begin, we'd like to submit the following poll, and I'm sure the company will be most grateful for your participation. I'd now like to hand over to CEO Jann Brown. Good afternoon.
Good afternoon, and thank you, Mark. I will first of all introduce the presenting team. We have five team members today, and first of all, myself, Jann Brown, CEO. We then have Sue Rivett, our CFO. Moving from left to right, we've got Vincent Duignan, who is our Country Manager of Vietnam and also our Group Exploration Manager, Director. We have Mohamed Sayed, Mo, who is our Group Head of Operations, and finally, Minh-Anh Nguyen, who is our Head of IR and also deals with our ESG. Minh-Anh, if we could have slide four, please. For those of you who are new to the company, we have been listed on the London Stock Exchange Premium List since 1997. In that period, we have been active in over 12 countries with a pattern of investing, growing, monetizing, and then returning cash to shareholders.
Since 2006, we've returned over $530 million to shareholders, and currently, our assets are in two countries, Egypt and Vietnam. In each of these countries, we have two licenses, which we will talk about throughout this presentation. In Egypt, we have the El Fayum license and the North Beni Suef, NBS, and in Vietnam, we have CNV and TGT. So what we offer to investors is a robust cash flow underpinning with a commitment to return an annual dividend to shareholders. We have substantial upside in near-term developments, which are both low cost and on the lowest end of the risk. And we have exploration potential, everything from low cost, low risk, right through to truly transformational, all already in the portfolio.
So if we turn to the operations block, we've had a first half of the year where there's been strong operational performance in both Vietnam and Egypt. In Vietnam, the CNV well completed in February, and production there peaked at over 4,000 bbls of oil per day. That was well in excess of pre-drill estimates. Now, that means, alongside the TGT well, we remain on track to meet guidance. Guidance has been tightened. We announced that at the interims, and we've got the success on the CNV well, coupled with a deferral of some workovers on TGT, which are balancing each other out, but still well inside the guidance that we initially gave back in January. Now, in Egypt, we drilled two commitment wells, exploration wells, one on each block. The first well ever on the NBS block was a discovery.
That has a potential, if the operator first-pass numbers are confirmed, to add about 12% to our net 2P reserves that were published for December 2022. And that we already have approval for a development license to last for 20 years on that discovery, and we're targeting first production from it before the end of this year. So that was a great success. There was also a discovery on the El Fayum exploration well, and that remains to be tested. And of course, the ever-important safety, there were no LTIs to report in the first half of the year. So looking at the middle block, the corporate, strong cash flow generation, particularly in Vietnam, with revenues, net backs, and cash all performing to expectation.
In Egypt, we continue to benefit for the carry, and of course, that, it was that carry in the deal that we struck with IPR when we farmed down to them. Gosh, I've forgotten how long ago. 2022, we completed. That carry covers all of our CapEx, OpEx, and G&A, and of course, has funded the discoveries there. And if we look at the cash position in Egypt for this year, we are marginally cash positive. We're about $5 million positive. Now, we had hoped to be significantly ahead of this, but the challenges in Egypt, not unique, in any way, shape, or form, across the global oil production countries.
But the challenges in Egypt mean that there's a limited supply of dollars in country, and so rather than being able to pay us in dollars, our receivable balance is building in Egypt, and Sue will talk about how we're managing that particular risk. So on the shareholder return front, in July, we made the first payment of the dividend under the formula that we announced last year, and we were delighted to be able to do that. And of course, our buyback, which we started in July last year, continues. And since the beginning of that buyback, counting both buyback and dividends, we've returned over $9 million to shareholders.
Finally, on the corporate, our Net Zero roadmap, and particularly important to institutional investors and, of course, to our lending banks, is well on track, and Minh-Anh will talk through where we are on that. Now, looking at future value creation and what to look out for. In June of this year, we had the grant of a license extension on our Block 125 license. That now lasts through to November 2025, which gives us all the time we need to coordinate the planning of drilling the well with the securing of a partner to come in and support the funding of that commitment well that we have. In July, we published an independent set of numbers. They were done by ERCE, and they are extremely encouraging, very much in line with our own internal numbers, and Vinny will walk you through them.
But fundamentally, across the two main prospects covered by the 3D, there is a mean STOIIP oil in place number of 40 billion bbls, so a prize truly worth pursuing. In TGT and CNV, also in Vietnam, we have a number of different approvals going through the system. Revised field development plans for both assets are progressing, and license extensions also going through the system to extend the life of these high netback assets. We've applied for these well in advance. The licenses do not expire for the next three to four years, but we're getting ahead of the curve by getting our applications in now. And finally, on Egypt, NBS last year was a hope, a prospect. It's now real. We've had a discovery.
The other two big value blocks in Egypt are both on the El Fayum field, they are the unconventional ARF reservoir, and work is progressing on that, and also on the deeper prospects, in the El Fayum, reservoir. So as we've talked about our history of investing in 12 different countries over our 25 years of being listed, we have a pattern of, investing, monetizing, and returning, and that means that there are never any sacred cow assets in our portfolio. We continually review our portfolio, and if at any given point in time, any of our assets is worth more to anyone else than they are to us, then we'll gladly have a conversation with them and, and trade.
And finally, we're very mindful that we're using shareholders' money, and we make all our investment decisions to balance immediate cash flow generation to support the commitment to the annual dividend with long-term growth prospects to support sustainability. And more broadly, our allocation of capital is designed to keep three things in balance: investment in the assets, balance sheet resilience, and returns to shareholders. And with that, I will hand over to Sue to walk you through the finance section.
Thanks very much, Jann. So if we could just move to the first slide. That's great. So as Jann mentioned, you know, very strong half year. So strong revenue, $86 million there. It was down on the same period last year, but only really for a factor of the Brent price, which was down considerably, as you'd be aware. The Egyptian receivables is on the slide there. I'll pick that up later. I've got a separate slide. It's important that we talk about that to you. In the middle, we've got the net debt position, so down 43% to 16.4%. So a great position there as we move forward. Obviously, if we'd have been able to get some of those Egyptian receivables in, then that position could have been a cash positive position.
If we could move to the next slide, that would be great. So in terms of the cash flow itself, just concentrate on a couple of elements there. You've got the $12.8 million, which is an inflow from our partner, IPR, who we farmed down to in Egypt. $5 million of that is the contingent consideration from price, the price, the Brent price improvement, and also $7.8 million to do with the carry that Jann was mentioning. I'll also bring your attention to the larger slice there, the blue, the $27.5 million. That's payments that we've made on the RBL and National Bank of Egypt. So leaving us with a moderate debt position outstanding as we move forward.
If we could go to the net debt, that would be great. So just to capture that net debt in focus, really. So $16.4, as we ended the half year. If we'd have had those receivables, so the right-hand column there, if we'd have had that money in from Egypt, then obviously that could have been a very much a different story, net cash of $14.5. I'll also draw your attention to the three columns that are marked by the operating cash flow, $21.3. Important, because that's the minimum requirement under the dividend buyback dividend program. If I could move to the next slide, Minh-Anh, that would be great. Thank you.
So in terms of hedging, very much, for supporting the RBL and also for supporting our stress testing that we run very regularly to make sure that the balance sheet is robust. So we've got a floor really of $63 and ceiling up to $103 there. So really just a supporting mechanism as we move forward. And if I could move to the next slide. Okay. So Egypt itself, obviously, Jann spoke about, you know, the position in country. It is very difficult, very difficult to get hold of U.S. dollars.
We, in 2023, as Jann mentioned, we should be cash positive by around $5 million, and, as we move into 2024, we would expect to start paying cash calls as the carry concludes by the end of this year, is our expectation. And obviously, with starting to pay cash calls, we would expect a large part of those to be paid in Egyptian pounds, which means that we can then take some of that receivable and pay for our cash calls to fund operations. So we still continue to receive small U.S. dollar payments in Egypt. So at the half year, $1.9, as you'll see on the slide there, that came through. But as I say, as we move forward, then we should see that position start to unravel slightly.
Also, of note is the $15 million there on the top left-hand side. That's the further contingent consideration that potentially we can get over the next three years from our partner IPR, price dependent. So between $62 a barrel and $90.5. Obviously, $90.5 will give you the full value there. So as I say, from an Egyptian position, we expect to be cash positive this year and neutral as we go into 2024. And so hopefully something to look forward to as the Egyptian economy starts to recover. If we could move to 11. Lovely. Thank you, Min-Anh. So just in terms of 2023 itself, strengthened the balance sheet and improved liquidity. We have strong cash flow generation from our Vietnam assets and that strong U.S. dollar cash flow.
In Egypt, obviously, we've got a lot to look forward to in terms of hopefully the position unraveling itself and getting some of those receivables back in. And team, in terms of the allocation of capital, as Jann mentioned, obviously, CapEx into the portfolio itself. So pre-carry for this year would have been $27 million. After the IPR carry, it's only $13 million that's actually leaving the Pharos bank account. Also, we continue with the share buyback, and obviously, we've had those dividends that we paid out in July, $5.6 million. And also, of course, we continue to fund that debt. So I think a strong position as we move forward. And with that, I'll hand over to my colleague, Mo.
Thank you, Sue. Starting the operation section with Egypt, you can see El Fayum is on production. You can see the production on the top, right-hand chart. You see steady production with the modest program. In the first half of the year, we were slightly below guidance. That's partially because of the repair period in May, and partially because we focused the first half on waterflood implementation, and those benefits, you see them more in the second half of the year, and indeed for the long term. We have narrowed the guidance. We keep a measured approach. We keep an eye on the receivable position, as Sue mentioned. So we have scaled back the drilling program. El Fayum has long-term license terms. The first license expiry is 2029, with an additional five years license extension.
So that allows us to afford slow ramp-up, but use the time effectively to basically put reservoir energy by waterflood. Implementing the waterflood will help the future drilling ramp-up, and bring low-cost barrels to production. That's through recompletions and optimizing existing waterflood patterns. Also, selectively drilling strategic prospects. The first commitment well in El Fayum, which tested one of several already mapped conventional exploration structures, have been successful, as you've heard from Jann, and the well have encountered the primary reservoir targets, and it will be tested in due course. There are no reserves in the current reserve base from that particular well. Continue with the exploration theme, and moving on to NBS, we have shared with you that NBS have made a commercial discovery.
Today, I'm pleased to share with you that we have been awarded 20 years license term, plus an additional 5 years extension for the discovery, and those are 11 large development blocks. We have also acquired the 3D seismic on the ground. That seismic will influence the future drilling of NBS and the development. So going to the next slide, please, Min. Thank you. So staying with NBS, now we've been awarded the development lease, and those are long-term licenses as well. Our focus is to accelerate the production from the already discovered well and further development around that area. So the next stage is the 3D seismic processing and interpretation, and the second commitment will be drilled this year soon. Changing gears to El Fayum.
So ramping up 2024 activities, that's including drilling, waterflood implementation, and continue with the strategic appraisal delineation exploration type wells. We've talked about the conventional. There is the deep, more prolific reservoir potentials, which we are progressing, and Abu Roash F, which is unconventional, and I will pick up on those in my last slides. Next slide, please. Thank you, Manan. So shifting gears from Egypt to Vietnam, starting with TGT. As you can see, the top chart, the TGT production, pretty steady production that's underpinned by the two wells we have drilled in 2022, and also a successful well intervention campaign. In the chart at the bottom, you can see the CNV, and you can see the increase in CNV production.
The period between March and April 2023, where it's above 4,000, that's when we had the new lateral 2PST1 only on production. After that, we had a period of stabilization, and you can see the overall stable field production and increase in CNV. We have delivered within the guidance in the first half. However, we have narrowed down the guidance. We brought the bottom end up to 5,000, and we have slightly reduced the bottom, the top end down to 5,300. The reason for the change, obviously, the strong performance in the first half improved the bottom end up, and we had a well intervention campaign planned for 4 Q 2023 in TGT, that now have been shifted to the first quarter of 2024, which will help the first quarter production in 2024.
The reason for shifting, though, is because we had a planned FPSO maintenance shutdown that was planned in August. Now it's been pushed to October, and, and, the maintenance shutdown have started. So that will, the reason why we see the changes. So even though the well performance from CNV has been really good, the overall forecast is slightly down at the top end, but delivering well within the guidance range we've given you, continue to deliver on our promises. So next slide, please. Thank you, Manan. So for TGT, our focus is to ramp up and gear up for the 2024 drilling campaign and well intervention. So pretty straightforward process, going back to drilling, similar to what we have done in 2022 and 2021.
Beyond the operations readiness, we are working with the regulator for this RFDP approval and the two assets in TGT for the final stage of approval and in CNV, going through the system, through the approvals process. Both assets have license extension applications that have gone through, which Jann have mentioned. I'm actually very excited about the license extensions because those comes in with an additional drilling. I've mentioned before, and I will mention again in my last slide, that Vietnam benefits from the drilling. Those are high netback barrels, and we see additional infrastructure-led exploration within the assets. Their economics will be improved with the license extension. So really excited to see the extensions, and we're going through the approval process. In 125, Vinny will tell you all about the subsurface and all the work we're doing and the great opportunity we have.
But from an operational point of view, so far it's been proven difficult to secure a rig to drill in the deep water in 2024, but the team continues to progress the well planning and continue to chase opportunity working with other operators in the region. Separately from drilling, planning, and getting ready for drilling, the team is working with different potential farm-in partners. Any of them would come in, would be a reasonable partner, we'll be happy with. Moving on. Next slide, please, Manan. Thank you. So this is really, in a nutshell, what we have been working for our shareholders, where the value growth comes from. Not very long ago, we were talking to you about NBS as a prospect, a hope, and a 100% exploration with all the risk that comes with it. Today, we have made a commercial discovery.
We have 20 years license term, and we have seismic, so a potential El Fayum will come up through NBS. So that's already been delivered to you. We have talked about the conventional exploration and the first well testing, one of many mapped structures, have been successful, encountered the main reservoir target. So more to come on the conventional exploration, which is a lower cost, low-risk exploration potential. In addition to the conventional exploration in Egypt, we have the deep, more prolific reservoir horizons. Those are sitting under, mostly covered by existing development lease, and we are improving, enhancing our understanding for a potential drilling in 2024. And lastly, the unconventional Abu Roash F, which if you hear--if you follow the news in Egypt, there was a recent success for bringing oil from ARF to surface.
We have mapped the ARF all across the concession, and we have had similar potential in ARF. So again, enhancing our understanding, prove the concept, potentially have a third party develop it on our behalf. In Vietnam, we've delivered on the drilling program 2021, 2022. We have drilling coming up in 2024. We've also have infrastructure-led exploration in TGT and in CNV, also will be improved with the extension. So we continue to work for value creation projects for you. With that thought, I will leave you to Vinny, who's going to tell you all about 125.
Thank you, Mo, and good afternoon, all. I'm a geologist, for those of you I haven't met before. I've been with Pharos for 20 years, all that time based in Vietnam. Before that, I was with Conoco and worked in the U.K., the U.S., and of course, Southeast Asia. So today I would like to share with you some of the details of the very exciting acreage we have in the Phu Khanh Basin. So why the Phu Khanh Basin? Let me go back two slides to a regional map of the sedimentary basins of Vietnam. As you are aware, Pharos has been very active and successful in the Cuu Long Basin for over 25 years. During that time, we have acquired a lot of 2D and 3D seismic and drilled over 50 exploration, appraisal, and development wells.
Now, there is an old adage in our business that says, "The best place to find big oil is next to existing big oil," and we have certainly proved that adage correct in our discoveries of TGT and CNV, which are immediately on either side of the giant Bach Ho field in the Cuu Long Basin. So extending that adage, the best place to find new big oily basin is next door to an existing big oily basin, hence our interest in the Phu Khanh Basin for over more than 20 years now. So we've extrapolated all our geological learnings from the Cuu Long Basin to the Phu Khanh Basin, which is the next basin immediately along strike to the northeast.
So the Phu Khanh Basin is essentially unexplored to this day, mainly by virtue of its presence in mostly current-day deep water in its central and eastern areas. However, this present-day deep water environment is very much a recent occurrence and does not impact the hydrocarbon prospectivity of the Phu Khanh Basin itself. Eni currently hold Blocks 124 and 122 to the north of us, and Murphy Oil have some outboard blocks to the east. There actually is an existing oil discovery in the western shallow water area of Block 124, I hope you can see my laser pointer, made by Plains, an American exploration company, in 2009. Now, this sub-commercial discovery indicates very strongly that there is a working petroleum system in the main part of the Phu Khanh Basin.
This is shown schematically in the geoseismic line with the inferred presence of a source rock kitchen generating hydrocarbons that are migrating into multiple reservoirs in a series of different trap types. Let's focus now on the Blocks 125, 126, which cover the main part of the Phu Khanh Basin. These blocks cover more than 10,000 square kilometers, which is a huge area. Mr. Google tells me it's actually 30% larger than the area within the M25 in London. There was very little legacy seismic data prior to us picking and signing up these blocks in November 2017. We immediately acquired an extensive 2D seismic data set, along with gravity and magnetic data, and you can see the 2D seismic lines running north-south and east-west on this map.
So interpretation of this extensive data set allowed us to map out a series of 12 significant leads. Now, these leads consist of a series of structural closures and stratigraphic traps, and exist at all levels of the stratigraphy throughout the tertiary section. They also occur in both shallow and deep water areas of the acreage. From this analysis, we selected an area for 3D seismic acquisition, shown by the red polygon on the map here, that covers a variety of different leads in both the shallow and the deep water parts of the acreage. Now, let's zoom in onto the 3D seismic area that we acquired. So this map here shows the northwest part of Block 125, with the 3D seismic area shown by the thin red line polygon.
As you can see, based on this new data acquired in July 2021, we have high-graded a series of our leads to prospect status. These prospects are each of a different nature in terms of trap type. Prospect A is by far the largest structure and can be subdivided into Prospect A drape, shown by the yellow shape, Prospect A North, and Lead A South, which is a continuation, essentially, of the main structure, but is not yet covered by 3D seismic. The different colors represent traps at different stratigraphic level, levels or different geological age sequences, within the section. Prospect D is a large stratigraphic pinch-out trap, and Prospect E1 is a very typical four-trap play that we see in all Southeast Asia basins.
All these named prospects are in current day deep water, deep water, but we are continuing to map some prospects in the shallow water area. This is a seismic line running through the key prospects, and the location of which is shown by this yellow line on this inset bathymetry map. You can see the excellent quality of the seismic data and the resolution, which has allowed us to really analyze this seismic in detail and extract a very good, robust interpretation. You can see Prospect A, tilted fault block structure, with the shallower sequences overlapping this huge feature. This is very similar to the Statfjord field in the North Sea and many fields in the Gulf of Suez. Prospect D is a pinch out of a very thick wedge of sediments that immediately overlie the main source rock kitchen in this area.
This is a very similar feature to the Jubilee and the Buzzard fields. Prospect E1, a very typical fault block structure. On the next slide, we'll zoom into the main part of Prospect A. Here you can see the detail of—Oops, sorry, I've gone one slide too many. Go back. Here you can see the detail of Prospect A and also our interpretation and the geological rises and falls. The bright amplitude events in the deeper section represent thick shale sequences through which we have drilled in the Cuu Long Basin and which we know to be very rich hydrocarbon source rocks. Our thermal modeling work strongly suggests that oil will have been generated from these shales in the most recent time and migrated into the interbedded and shallower sand reservoirs.
The shallower bright amplitudes up here, draping over the large structure, show indications of shut off and dimming. These are characteristics of what we call DHIs, or direct hydrocarbon indicators. This is by far the largest prospect that I've had the fortune to come across in my almost 40 years of working in the exploration business. We have a small but very experienced geoscience team here in Vietnam, and thus, we often reach out to some of the well-known geoscience consultancy groups in order to peer review our work. And in this case, we engaged ERCE, who have a lot of experience working in Southeast Asia, to review all of our data and interpretation. These maps were generated by ERCE and show the results of their own mapping of the 3D seismic data and the 2D data in the northwest part of Block 125.
The map on the left shows the low case or P90 areal size of the prospects. The map on the right showing the P10 or high case areal size closures. The overall ERCE interpretation results are similar to our work, our in-house work, which of course, is very comforting. We also asked ERCE to do a full probabilistic resource assessment and risking of their own prospect mapping and produce what's called a Competent Persons Report or a CPR, which essentially is equivalent to a financial audit report but follows the Petroleum Resources Management System rules. We have already published their CPR on our website. The next slide shows ERCE's assessment of the oil in place of the prospects and leads so far identified in the 3D seismic area of Block 125.
A lot of numbers I know here, but if you focus on the totals at the bottom of each of these leads and prospects, the total stock tank oil in place numbers range from over 5 billion to over 100 billion bbls. Yes, billions with a B. These are world-class prospects, with Prospect A, including the Lead A South extension, ranked clearly the best. Therefore, we are planning on drilling Prospect A as soon as possible. Our partner in PetroVietnam are fully on board and fully aligned with all our work and our conclusions. Our well planning for drilling Prospect A is well advanced, and you can see the preliminary well design on the schematic here. Our estimated well cost is $50 million using current day rates for drill ships or dynamically positioned semi-submersibles.
As you may be aware, it's a real challenge at the moment to contract a deep water rig due to the high level of recent exploration success in areas, in deep water areas such as South America, the Eastern Mediterranean, and most recently in Namibia. Rig contractors are looking for a firm one to year-long contract and are not interested in a single 30-40-day drilling job. So as Mo mentioned, we are working with other deep water operators in the region to put together a multi-well program to attract a rig contractor. We are also in discussions with several potential farming partners, some of whom already have drillship on long-term contracts. So to conclude, we believe that we have mapped a series of world-class prospects in a basin where we hold a prime acreage position.
We are in discussions with several experienced deep water operators with the goal of them funding our exploration well, and some of whom already having a drillship currently on long-term contract. In the event of success, which would be a true company maker for Pharos and would have a huge impact in Vietnam, our long-term relationships already established here would enable us to fast-track any development, s o watch this space. Over to you, Minh-Anh.
Thank you, Vinny. As Jann previously introduced, I'm Minh-Anh, Investor Relations and ESG, and I will be giving you an update on how we're doing on the ESG front. For those of you that have been following our story, you should be familiar with this slide. On the screen is our ESG framework, which detail numbers such as emission data, HSE and LTI, anti-bribery training, charitable donations, which are some of the metrics that you would expect to see from a responsible and sustainable energy company. This time last year, Pharos made a commitment to the market to set a goal to achieve Net Zero on Scope 1 and Scope 2 emissions across all of our assets by no later than 2050, along with a roadmap that will be published in 2023.
Today, I'm pleased to be able to give you an update on our progress on this roadmap so far. We are making good progress on our journey. In the last few months, we have completed the first two phases, which include a complete GHG emissions data review. We've worked closely with the asset team to understand the current context and future development plans, as well as understanding the nature of the business, as well as what the restrictions of what we can and cannot do, due to the age of the assets. From then on, we've developed different emission scenarios based on business-as-usual activities and have identified and ranked possible GHG emission reduction options.
The next step, which is currently underway, is to figure out the estimated capital required for these emission abatement technologies, coupled with ongoing feasibility studies for these shortlisted options before putting them all together to form a short, medium, long-term interim targets. Once this is finished, we look forward to be able to present our findings in our net zero roadmap, which is on track to be delivered by the end of 2023. With that, I will hand it back to Jann.
Thanks, Minh-Anh. Could you flip on to the next slide, please? Great. So what you've heard from the team is that there has been steady progress across the entire value chain. Vietnam remains the cash generation engine of the business. The cash flows there are robust, and with the license extensions that we've applied for, they will be sustainable into the 2030s. In Egypt, we've had exploration successes on commitment wells funded by the carry that we secured from IPR. And while we recognize that the political, economic situation in Egypt is challenging, we will continue to allocate our capital very carefully and to make sure that we remain as neutral and hopefully, cash flow positive as possible.
So Block 125, Vinny's talked to you about that, it really does offer transformational potential, and the receipt of the two-year license extensions gives us the time to coordinate the activities, and in particular, sourcing the all-important rig, as well as securing the right funding partner. We have time through to November 2025 to do that. And finally, that commitment to regular cash returns to shareholders remains, with the formula of at least 10% over operating cash flow in any given year to be returned in two tranches, an interim and a final. So fundamentally, we're allocating our capital carefully at this point in time to protect and enhance the value in the portfolio. We have a range of opportunities already in the portfolio, from near-term, lower risk, lower cost, through to the transformational that you've heard about.
Finally, that commitment to regular shareholder returns, including an aspiration to grow the dividend over time. With that, we'll conclude the formal part of the presentation and hand over to questions.
That's great. Jann, thank you very much, and to the rest of the team for updating investors this afternoon, and I will just bring up your cameras for the Q&A session. Ladies and gentlemen, please do continue to submit your questions using the Q&A tab situated on the right-hand corner of your screen. But just while the team take a couple of moments to review the questions submitted already, I'd just like to remind you that a recording of this presentation, along with a copy of the slides and the published Q&A, can be accessed via your Investor Meet Company dashboard. Minh-Anh, if I may just return to you. Obviously, you received a number of questions ahead of today's event and a number throughout today's presentation. So firstly, thank you to everybody for your engagement.
If I could, Minh-Anh, just ask you to read out the questions where it's appropriate to do so, and I'll pick up from you at the end.
Of course. Thank you, Mark. I'll now run through the pre-submitted questions we received over the last few days before turning to the live Q&A. The first question: What's the status of your Egyptian assets?
I'll take this one, Minh-Anh. I think you've heard most of it in my presentation, but just to iterate a few important points. So the situation in Egypt is that the asset production, as you've seen, is pretty stable. We are carried, fully carried through till the end of the year. And post-carry, we basically fund the majority of the cost in Egypt from, in EGP. That EGP will come by accepting part of our receivable in Egyptian pounds, so it will be funded from in-country. We focus on bringing low barrels to production and building reservoir energy with the water flood for future drilling success. We continue to see, exploration successes funded by the carry and, the discoveries on NBS and El Fayum, as I shared with you, are a key example of that....
In NBS, our first well was a discovery, and we will accelerate, that's what we're working towards for Q4 2023, accelerate the production from this area. We have been awarded a long-term license for 20 years, plus an additional five-year extension. Okay, in El Fayum, we also, like I said, stable production, pretty modest program, four development wells and 1 exploration well. And the exploration success, that's one of the many conventional exploration structures that we have mapped, so prove the concept. And lastly, again, long-term license up to 2029, with a five-year extension, with a $5 million signature bonus per development lease. We allocate our capital carefully, keeping an eye on the economic situation.
We take a measured approach to our investment in Egypt, and we, in the short term, we benefit from the carry, and in the long term, we invest for the future through the waterflood and additional, recompletions. Waterflood, those are the cheap barrels. We so far benefiting from the benefits of the IPR deal we struck, which firstly, the carry, and the other part is the contingent considerations, for, related to the oil price. The first payment we have received in June. In the future, we look forward to maximizing the potential from the Egyptian assets through the existing development resource base in NBS and El Fayum, and future, strategically target exploration potential. Thank you.
Thank you, Mo. The next question is: The Egypt situation seems to be going from bad to worse. Receivables seems to be continually going in the wrong direction. Other than simply reducing activity, what have the company been doing to proactively address the situation? What are EGPC saying? Is there any light at the end of this tunnel?
Okay, so maybe we'll split that in two, and I'll take a bit, and then Sue can talk a bit more detail. But, I recognize she did go through quite a bit of this in her presentation. So as I've noted, there is political risk, economic risk in a lot of oil and gas-producing countries. Now, Vietnam is probably a standout example of one that is incredibly stable and has had stellar growth rates throughout, and we've got absolutely no issues there. But across the globe, we've seen the additional tax levied in the U.K., we've seen disruption to access to pipelines, we've seen coups in various states.
So Egypt's issue is that it does go through cycles of non-payment, and we recognized this right at the outset when we went into the asset, and that's one of the reasons that we accessed a relationship with National Bank of Egypt, and we have a working capital facility there, which really helps support things. Now, the farm out to IPR was also a de-risking and partly reducing the spend exposure there, but also the benefit of the carry, which, as we've said, covers OpEx, CapEx, and G&A across the board. So, Sue, maybe bring you in on what you're seeing in terms of the Egyptian economic recovery.
Yeah. So, I mean, obviously, in country, they are doing an awful lot. So we've seen the IMF come in at the end of 2022 with a $3 billion commitment. They did pay a tranche of that earlier this year, and we are expecting them to do a further tranche towards the end of 2023. So that's, you know, a fairly small element. $3 billion's not going to change the dials there. But the Egyptian economy is also... the government is privatizing, so selling state-owned entities. So $1.9 billion, we understand, has been sold. That money, I believe, also is still to come through, and we understand there is potentially another $5 billion program that's to come through there.
So, so I would say, you know, there's, there's still a lot going on in country, and obviously, ourselves, in terms of what we're doing, we continue to, to lobby, EGPC, in order to get dollar receipts. We've had marginal successes in that. As, as you know, we've, we've had the $1.9 in the first half there. But, it should remind everyone, but it's about 18 months that we stopped taking, Egyptian pounds and said we would, we wouldn't need them, until obviously the carry had, completed. So as, as we roll forward, into 2024, we will start to need Egyptian pounds, as, as we start to be cash called. So we'll see a change there in, in what's happening and obviously the rebalancing a bit of the receivables balance.
Hopefully, that addresses the question.
Thank you, Sue. Another question for you. Last year, Sue was asked how the company planned to fund its 45% share in Egypt after the IPR carry, and was urged to not use Vietnam cash flow, as that will be akin to throwing good money after bad. Sue's response during that webinar was that Egypt will be self-funding going forward. Unfortunately, given the production decline in receivable situation, that seems unlikely now. So as we near the end of the IPR carry, how do you plan to fund Egypt going forward? Please don't use Vietnam cash flow or leverage the company.
Yep. Thank you, Minh-Anh. So I guess sort of reiterating what we've said during the presentation, in 2023, we expect to be cash positive in Egypt by about the $5 million mark. Obviously, you're aware that we get the contingent consideration from IPR. That's up to a four-year period, so 2023 being the first of those periods. So and as we move into 2024, we would expect to be neutral. So we will start to receive Egyptian pounds as part of the receivables, and obviously, those will be sent over to pay for part of our cash calls. So I think neutral as we move forward.
Thank you, Sue. Moving on to operational questions. With regards to the TGT field in Vietnam, when will further exploration be conducted? When will the license extensions be approved? Will the extensions for the charter hire of the FPSO be done on an annual basis or for a longer tenure?
I'll take that one, Minh-Anh. In terms of TGT exploration, as Mo mentioned in his presentation, we're looking at doing a lot of infrastructure-led exploration within TGT, and it's part of obviously getting the five-year PSC extensions. We need that before we can really invest in that exploration appraisal activity. You know, assuming we get a timely approval of those five-year PSC extensions, we'd be looking at potentially doing some appraisal, exploration, drilling end of 2024, early 2025. The sooner we do it, the better, so that we have a chance to tie it back into the existing infrastructure and obviously benefiting from the long-term production. When will the license extensions be approved? We're hoping by year-end, but more than likely early 2024.
In terms of the FPSO charter, we're actually meeting them in KL next week, and we're looking at doing a longer-term extension once the PSC extensions have been approved. Initially, we'll do a two-year extension till the end of the current term of the PSC, and then we'll have an option for the five-year extension on top of that. The applications for the extensions have been submitted. We've agreed the terms amongst the partners, those proposals are now going through, are currently with PetroVietnam and the Ministry of Industry and Trade. And hopefully all of that will be approved, as I said, by end of this year or early next year.
Thank you, Vinny. Vietnam has published a new fiscal framework for oil and gas operations. Can TGT or CNV benefit from it? If yes, have you estimated the impact in the NPV? Will the new conditions apply to Block 125?
I'll take that one again, Minh-Anh. So as part of the PSC extensions process, the partners have requested some better fiscal terms, and engagement on that and discussions on that is ongoing. For Block 125, it's actually already Block 125, 126. It's already an incentive block PSC and already has many of the beneficial fiscal terms of the new PSC model. For example, the CIT for Blocks 125, 126 is 32% instead of the normal 50%. And the PSC also contains a grandfather clause that any, that gives us, the contracted parties, the right to benefit from any improvement in fiscal terms applied generally across the Vietnam petroleum industry going into the future. That should answer that question, Minh-Anh.
Thanks, Vinny. You've been singing the praises of the 2PST1 well in CNV field, yet Vietnam production is still narrowed down towards only 5,000-5,300 BOPD. What gives? Are we suffering from significant decline rates and high water cuts from older wells? What will it take to get Vietnam back to a more respectful 10,000-12,000 BOPD? Is this an impossible target to achieve?
I'll take this one, Minh-Anh. I think it's worth reminding everyone that those are mature assets, so those have been in production for more than 10, 15 years. So mature assets, we manage them. Our focus is to sustain the production level from Vietnam, that's TGT and CNV, and we've been blessed with the success with the 2P lateral. In the success case for the explorations, I've mentioned a couple of different exploration potentials in Vietnam, the ILX and the 125, the production would increase considerably. So there is that potential with the exploration success. But right now, it's early to speculate what that number would, would be.
In terms of the 2P success and why we narrowed down the guidance, so as I mentioned in my presentation, the 2P has done extremely well, and CNV field itself will exceed its own forecast. But when you look at things on average for the total Vietnam, the increase in production by the 2P lateral has been offset with a shift in the well activity from Q4 2023 to Q1 2024, which linked to a delay in the shutdown for the FPSO maintenance from August to October. That delay in the shutdown maintenance allow us to have a stable production in the first half of the year. So hopefully that answers the questions, and we can have a follow-up later. Just allow more questions.
Thank you, Mo. The next question is: where does M&A currently sit within Pharos business plans? Is it something that management are actively engaged in or looking at, or is it completely off the table for the foreseeable?
So I'll take that one. We have, as a whole, the guys have demonstrated a lot of organic potential already in the portfolio, and that's where we will continue to focus. We do receive approaches, quite a number of approaches, and if we felt that any of them contributed to shareholder value, were NAV accretive, cash flow accretive, then we would pay some attention to them and do a deeper dive. But right now, there is nothing active under consideration.
Thank you, Jann. The market cap today is less than GBP 100 million. Don't you think G&A of $9 million-$10 million is still high for such a low production base and a company battling an ominous situation in Egypt? I know you've made some progress in this area from what was previously a very high G&A level. Don't you agree that there is still significantly more to be done to reduce G&A from this high level?
I'll pick up thenre, Jann. So obviously, we continue to look at G&A. It's one thing that we look at all of the time. And obviously, G&A comparable to one company to another can be different depending on their capitalization, policy, so it's often not directly comparable. Clearly, being a fully listed on the London Exchange, there is a sort of minimum level at which we would expect to have for a listing company of our size. As you know, the legislation continues, and listing requirements continues to increase as we move forward, you know, particularly on carbon emissions and Net Zero commitments, et cetera. So obviously, we continue to focus on those.
It's really important for us that we have good governance throughout the company. It's true to say that we have taken significant reductions throughout the board and the net reduction in fees. The board, as you might recall, reduced from nine to six and the executives from four to two at the 2022 AGM, so you know, a considerable reduction there. The chair, it's true to say, owns 25% less than predecessor. The G&A has been cut 53% since 2019. We're not complacent. We continue to turn the dials and make sure that we're spending money appropriately. Hopefully, that addresses the question.
That's great. Thanks, Sue. The next question is: At the recent AGM, there was what I would deem a substantial vote against management re-election. Approximately 37 million shares voted against. Have you had any discussion with these large shareholders? Do you know why they would want a change to the management team at this time, especially given the fact that things seem to be improving recently? Do they want a change in strategy? Have they made any demands?
So I'll take that one. Look, it's always important to engage with shareholders when they're expressing themselves through voting against any resolutions. Now, there's one significant shareholder who did identify himself. It wasn't just Sue and me that he voted against. The non-executive directors were also targeted. Fair to say that there's no change in strategy that is being requested, and I would say that across our register, there's quite a wide variety of views. And in the main, the debate plays out as to whether shareholder returns should be made by buybacks or whether they should be by dividends. And certainly, for the institutional shareholders, I think there's a recognition, no matter which they prefer, that there is a large body of other institutions that prefer the other.
So they're quite happy for us to balance our returns, and that's exactly what we're doing. A portion allocated to buyback and a portion allocated to dividends. Okay.
Thank you, Jann. The next question is: Why has the share price completely stagnated? The share price today is exactly the same as March 2021. Do you think it's a reflection of the lack of operational activity across the portfolio, or investors simply not buying the story? What will it take to move the share price?
So we are as frustrated as shareholders are, and we are not complacent about it. We continue to market to talk to the institutional shareholders, the advisors to make sure that we are put in front of new people, and we listen to what they are telling us. However, let's just put this in context. If we look at a peer group of 11 companies in the sector over the last 12 months, only two of those companies had a positive share price movement, and we were by far the largest positive share price movement in that group. And this group has not been targeted. It's, it's the one that the, the brokers sent to us.
Of those nine which had negative share price movements, the range of negative was -17% to -60%, and two of them were over -50%. It is a tough market for smaller E&P companies out there right now. As I said, we are not complacent. We will continue to prove up the value inside the portfolio, tell the story to whoever will give us time to listen. But we share the frustration of our general shareholders. I'm a shareholder myself, and still contribute a third of my salary every month to buying more shares in the company.
Thank you very much, Jann. We will now move on to the question that just came in the live Q&A chat. James C. asked, "Any political concerns shareholders should have in the regions that you're operating in?
Shall I take that? I mean, hopefully, I've already addressed that in one of the other questions. You know, we, we look across the world, and we see all sorts of political upheavals, tax upheavals, economic upheavals, disruption to access to vital kits, pipelines, et cetera. The risk that we have in Egypt is the economic position, largely prompted by the Ukraine war. I think the lesson is, it's very difficult in this business to completely avoid political risk. It's about managing political risk, and that's exactly why we have the National Bank of Egypt facility, why the carry from IPR was a significant benefit to us over the past year.
As Sue set out, you know, hopefully, as Egypt moves into presidential election periods, and really gets motoring on the divestment program that will bring in the big dollars to them, we can all start to move forward there. But it's a slow process in Egypt, there's no doubt, and we're allocating our capital appropriately while that's the case.
Thank you, Jann. The next question is from Omar F., and comes in two parts. First, should we expect a slowdown in exploration and/or CapEx spending in Egypt, given the accumulating receivable situation? Secondly, what is the expected impact on Pharos of the widely expected Egyptian pound depreciation, also given that the government is settling the receivables in EGP?
Mo, do you want to take the first part and then move to Sue?
Yeah, absolutely. So like I said, we have capital allocation. We have measured approach to capital allocation. So in terms of slowdown on exploration, we will do the strategic selective exploration. We have commitment, so our activities in the near future will be determined by commitment, so we will meet our commitment obligation on that front. And that's pretty much what I can say at this point in time.
Yeah.
Just a bit... Sorry, Sue, but just to be clear, that the two exploration wells were drilled in the first half of this year were commitment wells, and the strategy is very much about maintaining reservoir pore pressure in El Fayum and honoring our commitments to the government.
Okay.
Sorry, Sue.
So that's okay, no problem. So just picking up on the EGP point, obviously, as we mentioned, sort of 18 months ago, we said we wouldn't take any more Egyptian pounds from EGPC. We didn't want those in the bank account devaluing, and obviously, we're continuing to see the devaluation of the currency as we move forward. And I think that is all part of what is expected on the IMF loan, is a rebalancing of that currency. So obviously, we will take Egyptian pounds only when we need them to satisfy our cash calls moving forward. So it's really about, you know, leaving the receivables balance there as a U.S. dollar receivable, which is much safer, and only taking pounds as we need them, so a natural hedge. Thanks, Minh-Anh.
That's great. Thank you. The next question is from Stephen H. Can you demonstrate to shareholders that growing production in Egypt has better shareholder returns than buying back your stock at its deep discount to fair value over NAV ex Egypt growth?
So maybe if I tackle the first part of this one. There are two ways that you can do share buybacks. You can do it the way that we are, where we are limited by the regulations as to the volumes and the prices that we can trade out on a daily basis, and that is a relatively low-cost way of doing it. It's a fee per transaction. The other way of doing it has a very large fixed cost because it requires shareholder documentation, and really, you would only contemplate using that, the cost base would only be comparable if you were returning in excess of $20 million. And right now, as I said, we are balancing returns to shareholders, including the buybacks, investment in the assets, and balance sheet resilience, because clearly, that's really important.
We had lessons to learn from the past on balance sheet resilience. We have learned them, so we would not be contemplating a buyback of that scale at this stage. So that's why the level of buyback is set as it is. The investment that we're putting into Egypt, there has already been a discovery, that's been proved on NBS. We're waiting for the results of the El Fayum one, and there are two big blocks of value there also to go for. But as I said earlier, there is no sacred cow asset in our portfolio, and, you know, and if this asset was worth more to anyone else, then we would have a conversation with them. Okay.
Thank you, Jann. The next question is from A.M. What is the state of negotiations with any partners re: 125?
Vinny, do you want to take that one?
Yeah. Yeah, let me take that. So we're in discussions with several partners. We're looking for a partner that has deep water experience, so in the event of this discovery, somebody that can carry us through into the development phase. We're looking for somebody that has, hopefully, a drill ship or a DP semi on long-term contract, and we can get a slot from that company as part of the farming procedure. So the process is ongoing. It's kind of like for them, it's like buying a car. You're not gonna put the money down until you know when the car is available. So we're in this kind of chicken and egg situation. The first thing is to secure a slot, the drill slot, and then we'll be able to sign up a partner. Does that answer the question?
I think it does. Thank you, Vinny. I think another one would be for you, Vinny. A question from Peter H. "Can I ask what are the key geological risk in Vietnam Block 125?
Great geological question. Yes! So, you know, I think, Peter, was it? I think, we tried to share with you the, you know, our strong belief and the analogy between the Phu Khanh Basin and the Cuu Long Basin. Cuu Long Basin, obviously a very successful petroleum system, is working and proven. We see that in a lot of the basins, called Sunda basins, throughout the region. So source rock, we strongly believe that there is a source rock presence based on the seismic character I was showing you in the presentation, and it's very similar to what we see in the Cuu Long Basin. And of course, we have the small discovery in the shallow water area. That had to come from an existing source rock, a mature source rock. Reservoirs, certainly.
If you come to central Vietnam, you'll see these beautiful beaches. That's sand that's been eroded from the central highlands of Vietnam that will have gone way out into the Phu Khanh Basin in lowstand periods. Seals, we have lots of highstand systems tracts in the seismic that will give us good seals. So the key risk, I think, is the timing and the type of maturation from the source rock of hydrocarbons, oil and gas, and the timing of that. All the work we've done is strongly suggesting that it's 70% chance of oil is gonna be in those traps, after they were formed.
You know, obviously, you want the trap to be formed before the oil is generated out of the source rock, but that is the key risk, and the only way to, you know, reduce that risk is to get out there and drill. There's no further technical work or seismic, whiz-bang work that we can do to further eliminate that risk. We have to get out there and drill. Thank you for the question.
Fantastic. Thank you, Vinny. I think we have time for one more question. A question from Hemant S: "The TGT FPSO has been operational for more than a decade, and the charter may be extended to full year 2031. Would life extension activities be required for the FPSO? Will this disrupt the ongoing production from the TGT field?
I can take this one, Vinny. They're on me.
I'll take them.
Okay.
So we're actually in. We have our annual shutdown at the moment. As part of that, all the vessels and pressure vessels and many of the things are being inspected. The owner of the FPSO has assured us that no dry dock is necessary within right up to the end of our extended PSC period. That is subject to, you know, ongoing inspections, inspections of the hull, inspections of all the vessels, but all indications at the moment are no dry dock will be necessary up to 2031. Thank you for the question.
Thank you. I am wary of times.
Yeah.
I will hand it back to the IMC team.
That's great. Thank you very much, Minh-Anh, and thank you everybody for your engagement this afternoon. Of course, we'll make all the questions available to the company post today's meeting. Jann, if I may come back to you, I know investor feedback is important to you and to the rest of the team, and I'll shortly redirect those on the call to give you their feedback. But I wonder if I could, before doing so, just ask you for a couple of closing comments.
Sure. So this is a company which has learned from hard knocks over the past few years, but we are absolutely on track with the rebuilding. We've got a strong cash generation engine, particularly in Vietnam. We are committed to a regular annual dividend, and we've got a range of both exploration and development opportunities already in the portfolio. That's the Pharos story. Thank you.
That's great, Jann, and to the whole team, thank you once again for your time this afternoon. Can I please ask investors not to close this session, as we'll now automatically redirect you for the opportunity to provide your feedback in order that the company can better understand your views and expectations? This will only take a few moments to complete, but I'm sure it'll be greatly valued by the company. On behalf of the management team of Pharos Energy PLC, I'd like to thank you for attending today's presentation. That now concludes today's session, and good afternoon to you all.