Good afternoon, welcome to the Pharos Energy PLC investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and can be submitted at any time via the Q&A tab situated on the right-hand corner of your screen. Simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company will review all questions submitted today and publish responses where it is appropriate to do so. Before we begin, I'd like to submit the following poll. I'd now like to hand you over to Jann Brown, CEO. Good afternoon.
Good afternoon, everybody. Thanks for joining us. I'm Jann Brown, CEO, and with me presenting today are Sue Rivett, our CFO; Mohamed Sayed, our Group Head of Technical, who unfortunately has a technical issue, so we can hear him, but we will not be able to see him; and Minh-Anh Nguyen, who is our IR Analyst and lead on our ESG team. Without further ado, let's get into the slide deck. Slide 4, please. This team has been in role for just over a year now, and we've had a few strategic priorities that we have been focused on. Resetting the strategy, repositioning the portfolio, restoring the balance sheet resilience, establishing our net zero commitment, and reinstating regular shareholder returns.
Looking at each of these in turn, the strategy has been agreed by the new board and communicated widely at the interims last year. What we're offering is growth and regular shareholder returns. Looking at the portfolio, we have concentrated on the quick wins. For example, there's a number of low cost, relatively low risk opportunities in Egypt, which in a success case could be monetized very quickly. We've also concentrated on the higher value items in the portfolio. For example, the TGT field in Vietnam, where we achieved netbacks of $50 per barrel last year. We started the year, March last year, with the completion of our farm-out of Egypt, which is now non-operated.
The most important thing that we've been working on this year is progressing and maturing the exploration prospect in 125 in Vietnam, and you'll be hearing a lot more of that later. The balance sheet, Sue will talk to you about this. It's in good health. We have had a series of cost cuts. We've reshaped the organization. We've pared back the board. The combination of that plus the Egyptian work program being fully carried through to about Q3 this year means that our balance sheet is in really good shape. Last September, we announced our commitment to net zero, and Minh-Anh will run through where we are on that in her section. Finally, the reinstatement of regular shareholder returns. We started our buyback program last July.
$3 million allocated in 2022, a further $3 million was committed in January of this year. In September last year, we announced the framework and policy for our dividends, last week we announced the dividend of GBP 0.01 per share, which will be put to the AGM in May. Throughout all of these, what we're looking for is sustainability and a combination of cash flow and longer-term value. With all that work done, we have rebuilt the foundations. We're now on firmer grounds, we're put in the right position to look at how we best generate cash flow, first and foremost from our own portfolio. It also allows us to look more broadly at how we can drive value for all our shareholders, from not just assets in our own portfolio, but further afield.
No asset in our portfolio has sacred cow status. We are not afraid to monetize at the right time. Indeed, both the company and the management team has a track record of doing exactly that. We have an approach to capital allocation, which is flexible and aims to balance those two priorities in the strategy, the near term cash flow, which funds the regular shareholder returns, plus the longer term value, which fuels the growth. With that introduction, I will hand over to Sue, who will talk you through the finances.
Hi there. Thanks. Thanks, Jann. My name is Sue Rivett. I've been with the company about seven years. I took over as CFO in July 2021, and I've been in the energy business for about 40 years. Just to give you a bit of who I am. In terms of the business, 2022 was a good year, as Jann said. Basically bringing that balance sheet resilience back, it's been restored. Revenues were up 35% to $222 million. The net debt position down 50%. A modest net debt at just under $30 million. I'm not gonna go through everything on this slide, but I will draw your attention to the Egyptian receivables position.
Those who follow Egypt will know that there's been issues in country with the macroeconomic environment there. Sorry, I can't get my words out, so our Egyptian receivables has increased. It's gone up to $24.2 million at the end of 2022. It is a U.S. dollar receivable. If we wanted to take Egyptian pounds, we could take that tomorrow, but the Egyptian pound has been devaluing considerably in 2022 and continues in 2023. Much better that we sit on a U.S. dollar receivable, and, you know, look forward to taking that in the future. I should also point out that $7 million of that $24 million includes a catchup invoice. We were able to get improved fiscal terms on the assets there, and so that's a catchup invoice, a one-off.
I should also point to the fact that we have a facility in that with the National Bank of Egypt. It's up to $18 million, and it allows us to draw up to 60% of our invoices there in U.S. dollars. It's a very good facility in terms of working capital movement. Also, the IMF came into country at the end of 2022. We're starting to see small implications in 2023 of that $3 billion that was pledged at that point. We're also starting to see privatization being initiated by the Egyptian government with the thought that that will raise something in the region of $8 billion, and there are other initiatives.
When we took over the assets in March 2019, the receivable balance at that point was $30.8 million. The team worked hard to get that down to just under $7 million and obviously that's now popped up. I think the key is that EGPC have always paid their debts down, but it has been a cyclical thing that we've seen before. I think it requires a certain amount of patience in terms of getting the recovery of that U.S. dollars. Minh-Anh, if we could kindly move to the next slide, please. Thank you. I'm just gonna pick up on a couple of points here. Cash position improved considerably to $45 million at the end of the year.
I'll draw your attention to the $31.9 million there in, which is for the capital investment in both Vietnam and in Egypt. The right in the middle there, the $16.7 and the $27.1, that's the in and outflows of essentially that National Bank of Egypt loan and also the RBL, which we have over our Vietnam assets. With that, if I could move to the next slide, please, Minh-Anh. Thank you. Just in terms of the net debt, as I said earlier, modest net debt down 50% from prior year. I'll draw your attention to the operating cash flow, so over those four segments. That's important because that's the minimum base that we use for our dividend policy as Jann mentioned.
A $130 million basically coming in from cash flow from operations and obviously taxes paid there, taxes to the Vietnam government. With Egypt, EGPC pay the taxes at that point. Also of point in there is the $18.1 is, which is the working capital. That's us seeing the impact of the Egyptian receivables essentially in there. Also of note is the $18.4 in the middle there, which is the funding from our partner in Egypt, so IPR. That's how much they've funded during 2022. If I could move to the next slide. Thank you, Minh-Anh. Picking up on Jann's point, returns to shareholders. Share buyback initiated $3 million in July 2022.
We managed to satisfy that by January 2023, so six months the program took. We're into a further $3 million, which we announced in January. In terms of the dividend, operating cash flow, minimum of 10%. We are announcing a GBP 0.01 a share to go to the AGM in May. Basically, it's a GBP 0.01, which is over the whole of the 2022 accounts. Essentially what we will do from there on is we'll go to a normal dividend routine, which will be an interim and then a final. Something to look forward to there. Roughly a 9% yield overall. If I could move to slide 10, please. Thank you, Minh-Anh. In terms of 2023, that continued discipline that we applied to our capital management.
As Jann said, the balance sheet strengthening, improved liquidity and strong cash flow generation, U.S. dollars from our Vietnam assets. We have basically halved the staff, and the board has gone from 9 to 6. Those G&A costs coming down considerably there. In terms of the allocation for 2023, share buyback program and dividends, debt repayments probably in the region of $40 million. That's for National Bank of Egypt and the RBL facility there. That will fluctuate as obviously we have a redetermination process every six months, that changes. That's roughly what we've got in the books at this point in time. A modest capital program, $22 million. Would be $37 million, $15 million of that is funded from IPR, our Egyptian partners.
It's worth saying they do also fund the joint venture G&A and OpEx as well. Lots to look forward to in terms of them carrying us through. We also will have a contingent receipt of about $5 million during the first half of this year as part of that original farmed down deal. You know, hopefully, we can look forward to some improvements in the recovery of the receivable. I think a good year of 2022, but something really to look forward to in 2023. With that, I'll hand over to my colleague Mo.
Yeah, my name is Mohamed Sayed. I'm the Group Head of Technical for Pharos for the last three years, and recently the General Manager of the Egyptian Assets. Moving on. Yeah. Thank you, Minh-Anh. As you heard from Jann and Sue, it's an important year for Egypt, 2022. We farmed out 55% of the business and our paper share to IPR, who is an experienced operator in country. We were also able to secure a one drilling rig for a long-term contract that provided stable platform of activities. In a transition year, we were able to deliver within the guidance. As you can see in the two charts on the top and in the bottom, modest amount of activities, modest amount of capital being deployed in El Fayum, and we're able to stabilize the production around 3,000 barrels.
The other asset in Egypt is North Beni Suef, which is currently under exploration in the exploration phase, and we just finished drilling the first well. The focus for 2022 was basically continuing to identify low cost, low risk exploration prospects, which I'm gonna tell you a bit more about it in one of my slides, and prepare the asset for two commitment for the small seismic survey in 2023. Again, it comes in in my next slide. Next slide please, Minh-Anh. Thank you. Okay, our approach to investment in Egypt in 2023 is measured.
We keep an eye on the receivable position. We have the flexibility with the onshore assets to ramp up activity and ramp down, which we have done successfully pre-COVID and post-COVID, ramping up the production to 7,000 and ramp back down to maintain and preserve the balance sheet. In my 20 years career, I've seen at least two cycles of receivable building up and going back down. One with BP, where the receivable build up to $1 billion+ , It was cleared back down. With Merlon, $50 million to $30 million when we did the acquisition with Pharos, and it cleared back down to around $7 million. The focus, however, in 2023 is led by commitment. We have two commitment exploration wells to drill in El Fayum, which I'm going again to tell you about it in one of my slides.
Two commitment exploration wells in NBS, North Beni Suef, and small seismic survey. Keep an eye on the receivable and then we act accordingly. Away from the exploration commitment, we focus on bringing high value, low cost barrels through waterflood recompletion. There are several zones in the wells. We generally complete one or two. There are others already been discovered, sets behind pipe. Recompletion program is active in 2023. Next slide please, Minh-Anh. Sorry, before I leave this one. Sorry, Minh-Anh. Yes. On, we still have strong 2P position. As you can see, $15 million of 2P after the farm-down, so that's our 45% of the 2P and a significant 2C that there is a clear pathway to monetize the 2C. In my last slide, I'll explain a bit more about that. Next one, please.
Thank you. Okay, the focus for 2021, 2022, I've pretty much told you most about it. The key thing to note in these top gray bars is that in 2022, we were able to secure improved commercial terms. Our contractor take went from 42% to 50.8%, which is quite significant. Improves the overall project economics and break evens. Those are some of the best terms in country. In 2023, as I said, the focus shift. We bring those exploration. I have a slide to tell you about the exploration. We have two shallow prospects to drill. The shallow prospects are not currently in the 2P or in the 2C. Those will be an additional value add. They can be tied up quickly. They're within existing infrastructure.
We drill them, we make a discovery, put them on production relatively quickly. Gearing up to drill a deep well, which is potentially significant. Those deep reservoirs are prolific in the Western Desert and have produced some of them with BP and are quite significant treat. We're gearing up and firming up different prospects currently covered by 3D seismic in the frame. In NBS, like I said, we started drilling, almost finished pretty much with the first commitment well, and the 3D seismic survey started, and then the second well will come in later in the year. Next slide please, Minh-Anh. Thank you. This is my slide on the exploration.
Starting with the map, on the top, you can see a black dot and a red dot. The black dot is an existing Apache well, and the red dot is the well that we're currently drilling, the first commitment well. I think it's pretty encouraging, the key risk around that particular prospect is partially covered by 3D seismic, and the learning we have from Fayum will be applicable here, which may be around the viscous distribution, and it could be depleted because of the production from the Apache side of things. The map in the bottom shows you the two exploration prospects, shallow exploration prospects, that are surrounded by already existing oil fields. On the right, we have the West Ain Sokhna field with the black dots. The first red dot on the right, this is West Ain Sokhna extension.
We're looking at the extension of that existing producing field. The key risk there is the viscous distribution and again, field depletion because of the production from the existing well. The second red dot is in between two already producing oil fields and the structure well-defined on seismic. The key risk around it is that the fault seal, whether or not that fault is sealing. It's worth mentioning that our track record in exploration is about 58%, which is significant track record on in exploration on a 3D seismic. Next slide, please, Ma'am. This is my last slide in Egypt. That's how everything dovetailed together. Those are the key different projects that we work on as a team to further enhance and create value for our shareholders.
Starting from the green bars on the left, the ones at the bottom, we have produced 26 million barrels of oil from this field, which is significant volume. You do not produce this amount from a small field. Recovery factor is still low. We sell significant 2P and 2C resources. The 2P will be monetized through additional drilling, roughly 60 wells for the Field Development Plan with continuation of waterflood and recompletions. The 2C is about 20-25 additional wells. It's clear where we drill them. Again, it comes in with additional waterflood and recompletion program. That's how we generate 2C, 2P production and money. That money will give it back to you in share returns, share buyback, cash returns, and share buyback. Reinvest in the asset. We have no shortage of great opportunities to reinvest in the asset.
In Egypt, we have infrastructure-related exploration. We have two different types of exploration. We have conventional exploration, which includes three different categories. The first category is the shallow structures, which I've showed you two of them. We plan to drill in 2023 and tie into production quickly. It's relatively cheap. The dry hole cost in NBS or in Fayum is under $1 million. The drilling completed between $2 million-$2.5 million. Relatively cheap. We can bring those barrels to production quickly. They're currently not in 2P or 2C. There are several similar shallow structures have been mapped in Fayum. Those two are just the first of many that we've mapped on seismic.
The second type of conventional exploration is the deep, which we have a deep reservoir- pro reservoir horizons produces elsewhere in the western desert between 12,0000 ft- 14,000 ft. The third type is the northern area, which is. I know it's not very obvious on the map, but there is a light blue outline and a yellow blue and yellow highlighted outline. The northern area is the difference between the two. The significance of that area is just offset to an existing major Apache field, Cairo field, who produced 100 million barrel and it's still going. There's significant potential in the northern area that we cannot tap into yet because there is some military training ground. We will told the military we're leaving. Lastly, opening our production center in NBS. Again, you can see the potential of NBS could be similar to El Fayum. Next slide, please.
Okay, now changing gears to talk about Vietnam. The Egypt part was pretty cheap, onshore flex up, flex down wells, which is complementary to the Vietnamese assets, which is mainly onshore. Sorry, mainly offshore. Again, in 2022, before we get in 2022, one of the key things to note is we've been in country for over 25 years, and the significance of that is two things. Number one, we understand the regulation. We have strong relationship with our partners. Number two is we understand the subsurface well. Looking at the map, you can see our acreage position, which highlighted with the circle. This is where we produce from in TGT and CNV. Those also started as an exploration position, so-called, back in the day.
The two rectangles are our existing exploration acreage in the Phu Khanh Basin, which is surrounding by already hydrocarbon, producing hydrocarbon basins. Now I have more details to share with you on 125 and 126 exploration blocks, trying to put things in perspective for you. Bear with me. I will give you some more detail for the first time on 125. Now shifting gears to the focus in 2022. We have been able to deliver within the guidance, and we have done so at least for the last three years I have been involved with the project. In TGT, we have drilled two wells on time, under budget. You can see the production from the two wells in the green in the top chart with the two different green colors.
Second well came in slightly lower than expectations, still positive economics and timed it back. In CNV, we drilled the first lateral, which is very positive. We've seen the results of the lateral in 2023, that was the first time to drill a lateral in MBS, which the well cost by like 50%. The 2022 focus for the team on the exploration block was mainly progress lead, continue to progress lead to prospects and identify further leads and prospects in the shallow water. Next slide, please. Thank you, Minh-Anh. I know I'm rushing through this quickly, hopefully I'm allowing more time for you to ask as many questions as you want in the Q&A.
In 2023, away from the operations, there will be first no drilling in 2023, new drilling in TGT or CNV, currently going through the revised FDP approval cycle. What we will do is we will focus on bringing high value, low cost production through surface and subsurface optimization, which we do consistently. There's additional perf, water shut-off, et cetera, gas lift optimization, et cetera, et cetera. Away from the operations, the team is focused on finalizing the license extensions for the two producing assets, TGT and CNV, and then a new update to the Field Development Plan, post-license extension. It's worth mentioning that in the two producing assets, we have strong position with the 2P and the 2C, and clear way to monetize both, which I'm gonna show you in my last slide in this Vietnam section.
The focus in 2023, because I'm not gonna say this again, on the exploration block, number one, like I said, continue to progress lead to prospects. We have ongoing discussions with potential farm lease partners, any of which will be a good partner, and they will bring more than just money to the table. Lastly, there are two years license extension on the exploration block, and those have been submitted to PVN, the regulator. The PVN recommended it to the Prime Minister for approval for the matter of when, not if. Next slide, please. The first gray bars on the top, that basically the focus of 2021, 2022, which is mainly drill, drill.
We have the 2019 full Field Development Plan, which calls for six wells in TGT that all have been drilled, and proof of concept on the lateral in CNV, which have been drilled successfully and we've seen encouraging results from the production from the lateral. Down below the green bars, like I said, the focus in 2023 is the extension of the three different licenses, and then, drill, kind of more this drilling in 2024, two wells and one well, and further update to development plan that comes in later. In the exploration block, the gearing up and preparing for extended drilling, for this potential drilling in 2024, further our circumstances. Okay, my last slide on how things all tie together. Next slide, please, Minh-Anh. Thank you. Again, in the same fashion, we start with the green bars in the bottom to the left.
We have produced gross from the two assets in Vietnam, TGT and CNV, about 130 million barrels, and we still have strong 2P and 2C position. We don't reduce those oil volumes from small fields. The 2C component in Vietnam will be materialized through partially timing with the license extension and partially additional drilling. In TGT, it takes about seven more wells to come up to move 2C to 2P. The 2P in Vietnam, the majority of it sits under the existing no further case. Majority of the 2P can be materialized with existing wells underground. That's again how we generate the money, which give it back to you in dividends or share buyback. Even in Vietnam, we still have some really good opportunities to invest in. I was in Vietnam in February.
We discussed the license extensions. We've discussed some of those, infrastructure-led exploration. They exist within, the reach of the infrastructure of the field. The beauty of those ILX opportunities is you spend the majority of the money on the ground there. Lastly, 125 exploration block and like who knows what the potential is. I'll try to put things in perspective for you in the few slides, but it could be significant. Next slide, please. Okay, switching gears, talking about the exploration blocks. For those of you who follow us, this map should be fairly familiar for you. Just to orient the new people looking at it for the first time, the gray lines are the 2D lines. The 3D is highlighted in red.
The different shades give you the different sizes of the prospects that we've mapped and the leads. 1 - 7 is different potential producing reservoir horizons, which are similar to where we produce from TGT. Okay, next slide please. Thank you, Minh-Anh. In this slide, I'm trying to give you perspective on the resources. I cannot tell you the size of the prospects, at least not yet, because we're in the middle of the license extensions, the regulator in Vietnam would not allow us. Obviously, we don't want to piss them off. However, we have an independent third-party study ongoing right now with ERCE to basically try to publish those numbers which does not interfere with the license extension and our relationship with the regulator in country.
With that said, on the left-hand side, you can see the map of the Cuu Long Basin, which we produced from TGT C and D. A notable feature in there is the Bac Ho field, which is a famous field in Vietnam called White Tiger. This field is about 1 billion barrel plus. You can see the area. Obviously, area is not the major, like, the only factor determining the volumetrics, but it's an important factor. Area-wise, it's about 100 km. If you look at the prospects we've identified, Lead A, for example, is one that we focus on. D as well and E, they're all significant areas. Again, I'm trying to put things in perspective for you without being explicit with what the numbers are.
It's also worth mentioning that the Cuu Long Basin itself is proven to be a multi-billion barrel generative basin. Okay, next slide please, Minh-Anh. Thank you. In the same fashion I showed you on an earlier aerial perspective what the resources look like, now on a seismic cross-section, you can see an arbitrary line going through A to B. In this exploration basin, especially when it's frontier, you wanna see some key components. One is the source rock, and you can see the source rock here highlighted in purple with S. Different potential producing reservoir horizons, which is highlighted with the R. The cover rock and a pathway for oil migration.
As you can see on this map towards the point A, the prospect A, D, and E, those are the three prospects that the team have been focused on, and they have similar features to some of the really good assets I've worked on in the past. Water depths wise, prospect A is similar to Thunder Horse in Gulf of Mexico, you can see some of the similar features. Next slide please, Minh-Anh. Thank you. This is my last slide, and I'm just showing to you three key prospects that the team is working on. They're not the only prospects that the team is working on. The team is generating additional leads and prospects in the shallow water area. These prospects roughly between 1,900 m-1,300 m.
Once you take the water depth out from sea depth to the total well depth, it's similar to what we produced in the Cuu Long Basin with TGT. An area, exciting time and exciting area for us. That's all I can say at this moment. I'm happy to hand over to Minh-Anh.
Thank you, Mo. Afternoon everyone. As Jann have briefly introduced in the beginning, I am Minh-Anh Nguyen. I joined the company in 2019 as Pharos investor relations analyst, and I'm also part of the company's ESG team. Today I have just two ESG slides that I will now walk you through. For those of you that have been following our story, this slide should be quite familiar to you. On this slide are the usual key ESG metrics that we track, which is what you would expect from a sustainable and responsible energy company. Due to the interest of time, I'm not going to go through everything on this slide, but the point of this slide is to show that we are open and honest about our approach to ESG and ESG reporting.
All of this data can be found in our annual reports, which will be published later in April and will also be available on our website. Moving on to the next slide. As Jann mentioned in her first slide, in 2022 we made the commitment to achieve net zero on our Scope 1 and Scope 2 emissions across all of our assets by no later than 2050. It's worth noting that 2050 is a baseline date for us, meaning we will do what we can to try to accelerate and move this target earlier if possible. We're also working hard to develop a roadmap towards this net zero ambition, which will be published later in H2 2023, so one to look out for. Current considerations for the roadmap include setting a framework to reduce emissions across our...
all of our assets, the targets we need to hit in order to achieve that 2050 goal, the estimated cost needed to get there. How we can implement, manage, and monitor this technology. We recognize the journey to net zero will not be straightforward, with new ideas and new technologies constantly emerging to be tested. We are committed to transparency. We will keep our stakeholders updated on our progress. With that, I will now pass it back on to Jann.
Thanks, Minh-Anh. Thanks, the team. What you have heard and seen is that we have a solid balance sheet. We have robust cash flow from our assets in Vietnam particularly, and we have got catalysts for growth, most notably on Block 125 as Mo's outlined, which would be a great opportunity for any company. For one of our scale, the leverage is quite significant. On the right-hand side of the slide, you see what the upcoming catalysts are for 2023. In Egypt, payment of the receivables or resumption of getting some dollar flow in from the government would be a game changer for us. We are cash flow neutral for this year, largely as a result of the carry and the first contingent payment coming in from the deal terms.
It is disappointing that the appetite for investment is more muted, because of this lack of dollar inflow and payment from the government. You've also heard about the first wells on the NBS block. The results of those will be coming through in the next month or so. Progress to be made on the other parts of El Fayum that have not yet been touched by drilling. Moving to Vietnam. Again, on the producing assets, the license extensions are routine but important to capture that additional 2C value that Mo talked about, and to prolong the lives of what are essentially very high net back barrels coming out of these fields. The updated Field Development Plans, again, routine, going through the process and setting us up to resume drilling in 2024.
That means preparation work, long lead time items, et cetera, in 2023. Finally, on block 125, the license extension, I'll just repeat what Mo said. This is way ahead of the other two. The regulator has actually submitted a letter of recommendation to the Prime Minister that this license extension should be granted, which is really positive for us. That means that in due course we'll be going ahead to source long lead time items and get that all-important drill ship needed for those deep water wells that Mo was highlighting. Finally, you, as you would expect, we're on the next slide. A huge amount of time and effort is focused on bringing in the right new partner. That's high on our agenda. Next slide, please, Minh-Anh. Finally, we have a clear road map to generate cash and create value for all our shareholders.
We have a solid pipeline of projects ranging from the low cost, lower risk, fast to bring into production opportunities that you've heard about in Egypt and of course the basin opening play in Vietnam. We, in all our capital allocation decisions, target either value or cash flow per share, and it's all underpinned by the robust, sustainable cash flows in Vietnam. We've also got the commitment to regular cash returns, through the dividend formula, but also through the buyback program that is ongoing. All in all, what we're offering is an asymmetric value proposition of solid cash flow with a commitment to return a decent portion of that every year, plus substantial upside on a scale rarely seen in a company of our size. That concludes the formal part of our presentation, and I'll hand back to the IMC people to take us through to Q&A.
Thank you all very much for your presentation this afternoon. Ladies and gentlemen, please do continue to submit your questions using the Q&A tab situated on the top right-hand corner of your screen. Just while the company take a few moments to review those questions submitted today, I'd 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 our investor dashboard. As you can see, we have received a number of pre-submitted questions along with live questions throughout today's presentation. Thank you to all investors for submitting their questions. Minh-Anh, could I please ask you to read out the questions and give responses where appropriate to do so, and I'll pick up from you at the end.
Of course. Thank you, Lily. I will now read out the questions which were pre-submitted to the company ahead of the event. The first question is: The return to dividend is welcome, but the 1p dividend is 60% less than the dividend paid the year before COVID. Will the company consider special dividends?
I'll take that one. This was submitted in advance, so I've got, unfortunately, a lengthy response to this, because there's quite a lot in the first sentence, which is a statement before we move on to the question about special dividends. If we look back, the last dividend before COVID was paid in 2019, and based on the operating cash flow of 2018, that operating cash flow was $56 million, so almost exactly the same as we achieved in 2022, which is funding the 2023 dividend. Now, in 2019, the total cost of the dividend that we paid out was $27 million, so around 50% of operating cash flow was paid out in dividend. Right now, what we're doing is balancing three things all the time.
First of all, our liquidity and our balance sheet resilience. Secondly, return to shareholders. Thirdly, investing in our asset base. The policy that we announced last September, which is the first policy that the company's actually had, so we're trying to be clear and transparent about, you know, what the minimum payment will be, says that there's a floor of 10% of operating cash flow to be distributed. Of course, that percentage can be flexed up. There's no ceiling on what percentage of operating cash flow that we would pay out. In most circumstances, there would not be a need for a special dividend. It would just form part of the ordinary dividend if we believed that there was more cash that we could allocate to the dividend part of the equation.
Right at this point in time, a payout of 50% would divert cash away from our other priorities, including the buyback program, investment into our assets, and I know from other questions that have been submitted that these are really important to our investors as well. Our aim is to ensure that the business is sustainable to allow ongoing dividend payments to be open and transparent about our plans for capital allocation, so investors can make their own decisions about the company. Getting to the question part now, would we consider a special? If there was ever a level of excess cash which would merit a special, for example, on an asset realization, and then we know that we have shareholders who are big fans of dividends and others who prefer buybacks.
If we had those circumstances of excess cash, then these preferences would be taken into consideration, before we made any decisions about how best to return capital to shareholders. Hopefully that answers that question. I'm very happy for people to submit follow-on questions. As I think we said earlier, as we did last time, if we don't get round to any question on this call, which now has 14 minutes left, we will provide written answers to them, which will be posted on our website, following that. Over to you, Minh-Anh.
Thank you, Jann. The next pre-submitted question. Good to finally see the long overdue downsizing and cost-cutting take place. The company's G&A is still higher than other producers, with a 5,00- 10,000 BOPD production base. Do you not think that further reductions are necessary, at least until there has been some production growth or share value appreciation?
Thanks, Minh-Anh. I'll take that. So in terms of the overhead, obviously it continues to remain a focus, as you would expect for the group. An ongoing focus, even though we've been through quite a big program. We restructured the Egyptian business in 2022, obviously with that farm-down to IPR. Essentially, we've halved the number of staff on the books, and also we've taken the board from 9 to 6. You know, quite a considerable decrease over a period of time. In 2020, for instance, the G&A was something just under $15 million.
As you'll see from the results this 2022 is down to 10, and we're forecasting that to go down a little bit further to 9.5 for 2023. I should say this is all against the sort of backdrop of inflationary pressures throughout the globe. Hopefully that answers the question, and I'll pass back to you, Minh-Anh.
Thank you, Sue. Moving on to Egypt questions. Despite two years of IPR expertise and funding, Egypt is still only expected to produce 1,350 BOPD net. How can we get out of this situation? Has the company considered selling it and moving on?
Okay, I'll take that one. Look, we are frustrated at the pace of the ramp-up, and I am well aware that IPR is too. The oil is in the ground. Every year, the 2P reserves are being certified through the CPR process. In 2019, 2020, we proved that what's needed to get it out with attractive netbacks is continuous investment to get production levels up and the cost per barrel down. We're not here today to make excuses for the slow ramp-up, but no one foresaw the pressures that would be put on the Egyptian economy following the onset of the war in Ukraine. You've heard about the receivable situation, and that clearly has muted the appetite for investment, given lengthy payback periods that the industry is now experiencing. It's not unique to us, it is across the industry in Egypt.
Whilst it's frustrating, on the plus side, the oil is not going anywhere. We have these licenses long term out to 2034. You've heard the resumption of payment of the receivables would be a game changer, and Sue's talked about some of the inflows coming into the Egyptian economy to spur that on. The availability of dollars when that comes about again, will reopen that appetite to invest. Again, you've heard from Mo about the range of investment opportunities in Egypt. Low cost, relatively low risk, can be brought quickly onto production. Frustrating, but a lot to play for with some real value catalysts.
It's important to be clear that, as I said earlier in the presentation, we're not wedded to any of our assets, and the board always reviews and keeps under review the role of each asset in the portfolio. We take into account the return on capital, the cash generation potential, cost, growth, strategic fits. If any asset did not perform, and we thought that there was a chance of a reasonable realization, then, you know, that would be on the sales block. If you look at the track record of the company, there's a strong track record of monetizing assets at the right time. In Egypt, we're fully carried for the next six months' work program. As I said earlier, cash flow neutral this year.
Lots of growth to go after. It needs these incentive packages coming in to provide $ into the Egyptian economy to really kickstart the next phase of the investment. Again, hope that's answered your question, but if there's any follow-ons, we will be happy to answer them as well.
Thank you, Jann. Next question is in regards to IPR. The company said the IPR free carry will be utilized by H2 2023. Can you please clarify Egypt funding plans beyond H2 2023, as the asset does not produce sufficient free cash flow to fund itself?
Yeah, I'll take that, Minh-Anh. Sorry. Oh, there- o h. Put my camera on. Sorry. Two seconds. Okay. Yeah. Sorry for flipping the camera on and off. Yeah, as Jann mentioned previously, obviously we've got that carry through. It's essentially it'll be through to Q3. It covers not only the CapEx cost, but also the joint venture G&A and OpEx. We also have that $5 million coming in for the contingent consideration. That's part of the original deal, based on the Brent price. Sorry. We can expect that to come through for the next three years. You're providing the price is there. Additionally, we should expect to see some U.S. dollars coming through in the period.
We are getting small U.S. dollars through monthly, but obviously if we can get some resurrection of that receivables position, then obviously we'll have a much better position. 2023 is will be pretty neutral as I think Jann mentioned earlier. With that, I'll hand back to you, Minh-Anh. Sorry.
Thank you, Sue. Switching gears to Vietnam, I think this one is probably for you, Mo. The question is: What is the reason behind the lack of budget approval for drilling new wells in Vietnam? Is it simply a case of poor planning or the good old lack of alignment with Petrovietnam? As Mo knows, if we don't drill, we cannot convert 2P to cash flow and cannot convert 2C to 2P. Will the company be able to address this issue this year so that we can stave off the inevitable production decline?
Thank you. That's a good question. Starting with it's not just about the budget approval. We have the budget approval cycle, but more importantly is the process that all the everything needs to go through in Vietnam to make sure that the drilling includes all the relevant information. No activity can be undertaken if it's not included in an approved proof Field Development Plan. The revised proof Field Development Plan from 2019 in TGT was approved in 2020, which called for six months, and they all have been drilled by 2022. In CNV, we had the RIGP approved in 2022 and the lateral 8 approved.
Working on this update of the FDP for TGT, it's important to include the result of the last two wells that were drilled in 2022, which were put on production in October, in November. The reason it's important because with the new results from the recently drilled well late in 2022, we can optimize the future well locations, and we can have a better production from the simulation model of the performance of the new wells which have been completed. That full field, revised full Field Development Plan for TGT have been submitted and approved by partners and have been submitted to PVN, the regulator, and we had the first discussion with the regulator. We'll now push it to the Ministry of the MOIT for further approval and additional discussion. The TGT part is done.
The CNV, as I've mentioned, the lateral was finished drilling in 2023. We put it on production in February. We are now incorporating the positive results from the lateral into the existing simulation model and update the full Field Development Plan. There are ongoing discussions with the partners. It may take a little bit longer to get the FDP for CNV. In terms of how we deal with it, in terms of declines, first of all, we are getting off the drill early in 2024 with the TGT wells. In 2023, we continued to focus on those high-value, low-cost barrels I've mentioned. They will come in through additional perforations, water shut-off, gas lift optimization, and surface optimization. Those are some of the key activities we're working on in 2023 to sustain the production level.
Thank you, Mo. Just another question on Vietnam. Could you share the latest update on the revised Field Development Plan and the application for license extension at TGT and CNV? Where are these plans expected to be firmed?
Sure. I'll take this one too. I've mentioned the TGT full Field Development Plan is submitted to partner, approved, PVN discussed, MOIT now further discussion and approval. That's progressing. On the line, the CNV, as I said, incorporating the lateral results so that come out in 2023. In terms of the five years extension, the extension I was in Vietnam in February, we discussed extension, which by the way, we're applying for it well ahead of time. The license does not expire until 2026. Okay? We applying for ahead of time because we can see further drilling that will enhance with the additional extension. We discussed the extension. We discussed several opportunities for those ILX exploration we've talked about.
The extension itself has in principle been agreed with all different partners, have been formally approved by PVEP, the national oil company, have been approved by Forest and because it right now working its way through PTT approval cycle and it just takes a little bit of time. You know how it is in Southeast Asia in company. That's all I can say on the extension. In terms of when we expect that to be firmed up, I would say, in 2023.
That's very helpful. Thank you, Mo. The next question I have is, there are 2 additional wells planned at TGT and 1 additional well at CNV. What is the break-even price per barrel of oil for these? Are these the final wells to be drilled at TGT, CNV, or are there more potential drilling opportunities in the future?
Okay. I think I've answered part of it on the previous question. Basically, we have a, if you call it a mini Field Development Plan ongoing now with the two wells and potentially a well in CNV, two in TGT, and that just carry us through as we get the extension finalized. Once we get the extension, we expect to get an updated revised Field Development Plan in which we expect the additional drilling of new wells and pipe tracks. Some of them are dependent on the extension, some of them are not. That's in terms of future extension. In terms of net back achieved in 2022, we were able to achieve $50 per barrel in 2022.
Great. Thank you, Mo. The next question is, back in 2018 when the FPSO charter at the TGT field was first extended, the company saw a reduced lease rate. Will the company see any further savings in the lease rate when extending the charter of the FPSO at the TGT field, which is due to expire in December 2024?
Yeah. Again, it's good I'm excited with the amount of interest in our patients, so I'll take this question. I would say unlikely in the existing license term we see improvement on the borehole model cost, but we expect negotiation for the extended license period. We should see more competitive rates. Just to summarize, unlikely to see significant change during the TGT license term, which is 2026, but we expect to negotiate for the extended license period, which is from 2026 onward. We should see competitive rates.
Fantastic. Thank you, Mo. I'm just wary of time as it is now 4:00 P.M. I think we do have time for one more question. The question is, have you had any discussion with the significant shareholder who has recently acquired over 6% of the issued share capital? Are you aware of his intentions and plans?
Hi. I'll take that one. Look, we have an active dialogue with all of our shareholders. We have quite a number who are around about that same percentage rate. I think I know the individual that you're referencing. Indeed, we had the normal prelims roadshow with him yesterday. We listen to our shareholders. We welcome all constructive feedback that's focused on driving shareholder value for all of our shareholders. I'm sorry that the pre-submitted questions have taken up all the live air time that we've got. We do commit to responding to every single question that's submitted, and we'll do that as quickly as we possibly can. With that, I'll hand back to Investor Meet Company.
Thank you all, and I think you've addressed all those questions you can from investors, and of course, the company will review all questions submitted today, and we will publish those responses on the Investor Meet Company platform. Before redirecting investors to provide you with their feedback, which I know is particularly important to the company, Jann, could I please just ask you for a few closing comments?
Hopefully what you've heard today is that we are offering protection of the downside, robust cash flows with a commitment to return regularly a portion of those to shareholders, but with significant upside on a scale that is rarely seen in a company of our size. We've got a well-managed balance sheet. We've got a range of opportunities in the portfolio, but in particular, Block 125 is a standout for us. Thank you all for your interest. We will reply to your questions. They'll be on the IMC website, but also on our own. With that, we'll say goodbye.
Thank you all for updating investors today. Could I please ask investors not to close this session, as you'll now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations. This will only take a few moments to complete, and I'm sure will be greatly valued by the company. On behalf of the management team of Pharos Energy plc, we'd like to thank you for attending today's presentation. Good afternoon to you all.