The latest research note from Cavendish highlights that Pharos Energy (LON:PHAR) is showing positive momentum across its operations in Egypt and Vietnam, underpinned by a strengthened financial position and a robust development pipeline. The company recently received a $20 million payment from the Egyptian General Petroleum Corporation (EGPC), reducing its receivables balance to just $7.4 million — the lowest level since December 2021. This significant payment highlights improved cash collections and lays the groundwork for future reinvestment in Egypt.
Pharos Energy’s strategy in Egypt continues to deliver results. In September, the company secured approval from the EGPC Executive Board to consolidate the El Fayum and North Beni Suef Concessions. This consolidated agreement introduces more favourable fiscal terms, extends the life of the licences, and mandates new work programmes that are expected to boost production. Cavendish notes that this could allow Pharos to upgrade 3.1 million barrels of 2C resources into 2P reserves — a 25% uplift net to the company — once fully ratified by Parliament in early 2026.
In Vietnam, Pharos is executing its most significant drilling campaign since the field’s initial development. Early signs are promising, particularly with the first well on the TGT field exceeding expectations. The six-well programme, which spans both appraisal and infill wells, is expected to deliver incremental volumes from 2026 and reduce risk on future development areas. The company is preparing to drill the TGT-18X appraisal well, targeting the untapped western section of the TGT block, while activity on the CNV field also continues with the CNV-8P and CNV-5X wells.
James McCormack, Director of Research at Cavendish, commented directly in the report:
“This reduction in the Company’s receivables balance, together with the improved fiscal terms from the new consolidated concession provide the framework for the continued organic reinvestment in Egypt, unlocking long-term value for shareholders.”
The broker has raised its target price on Pharos Energy from 51.4p to 52.8p, citing the improved cash position following the EGPC payment. With a current share price of 20.2p, this implies an impressive 161% upside potential.
FY25 & FY26 Financial Highlights:
- Revenue (2025E): $111.5m, rising to $147.7m in 2026E
- Adjusted EBITDA (2025E): $60.0m, increasing to $88.1m in 2026E
- Free Cash Flow (2025E): $25.7m
- Year-end 2025 Net Cash: Estimated at $38.4m, up from $22.6m in June 2025
- Dividend per share: Rising steadily to 1.62c in 2026E
Cavendish believes the strong balance sheet offers flexibility to pursue further organic and inorganic opportunities, or return value to shareholders through dividends and buybacks.
On a Final Note
Pharos Energy appears well-positioned to build value for shareholders in 2026 and beyond, supported by disciplined capital allocation, low-cost production, and meaningful exploration upside. With both Egyptian and Vietnamese assets showing operational progress, Cavendish maintains a Buy rating, reinforcing confidence in the company’s long-term potential.
