Pharos Energy plc (LON:PHAR) Chief Executive Officer Katherine Roe caught up with DirectorsTalk to discuss the company’s 2025 milestones, including enhanced fiscal terms in Egypt and a strategic drilling campaign in Vietnam, while outlining a forward-looking growth agenda for 2026.
Q1: 2025 was a pivotal year for Pharos Energy and the company is now poised for an exciting 2026. Before we look at 2026, what are your reflections from the year?
A1: 2025 was a good year for the business. We really tried to strengthen everything financially, operationally, and just enhance the profile of a business that had previously been a little bit weaker, both operationally and financially.
So, by that, I mean we strengthened our balance sheet. We remained debt-free throughout the whole of 2025 and continue that throughout, whilst ensuring that we can manage our operations with internally generated cash flow from the existing assets. That’s really allowed us to not only fund a major investment programme into our core assets, which are in Vietnam, and we’ve kicked that off the end of last year with a view to increasing production in 2026 and beyond. So, that was a big milestone.
We also improved our fiscal terms in our non-core assets in Egypt. We did that through consolidation of our existing assets into one new agreement. We worked together with our operator to achieve this and that’s really enhanced the economics for us as we look to increase investment back into those assets.
We’ve also seen a material recovery of receivables. We did have a large receivables balance in Egypt, which is similar to a lot of our peers operating and working in Egypt and we saw a significant payment at the end of the year to reduce that balance. Our balance is now the lowest receivable balance we’ve had for three/four years.
So, that together has really enhanced the balance sheet, has put us in a very strong position as we enter 2026 and enabling us to look forward to operating our existing assets with more value and extracting further value in the existing portfolio.
Q2: As you say, it’s a great end to the year with $20 million received from EGPC.
A2: Absolutely. That’s a large amount relative to our outstanding balance, which was at around $27/$28 million prior to that $20 million payment received.
With receivables, it is invoices that are credible and owing to us, but to receive a large cash payment in one deliverable payment is very well received. I think it gives us confidence to look at sensible reinvestment back into Egypt at the right time, ensuring always that we have the economics that can support a reinvestment decision.
Improved fiscal terms along with that payment has really helped with that Egypt position, whilst we remain very focused, as I said earlier, on the core activity of that drilling campaign in Vietnam.
Q3: Turning to 2026, what do you think it holds for the company? What can investors expect to see?
A3: I think the big theme for us at Pharos Energy is growth. We want to see growth in the existing portfolio and beyond.
By that is we’re looking at opportunities to supplement the existing assets with additional new assets. It is hard to find good quality additional assets that are accretive in value to an existing portfolio. We’re very conscious of that when we evaluate new opportunities, but we think there are opportunities that will fit the existing portfolio very well. There’s a couple of those that we’re looking at right now.
I think 2025 was a year of consolidation of the existing assets to ensure that we’re doing everything we can to extract as much value from those existing assets as possible. 2026 is focusing now a shift a little bit more towards what else is there that we can do to really drive production, drive scale, drive cash flow generation.
Ultimately, this is all with a view to delivering returns for shareholders. We already do that through our sustainable dividend policy, which will continue, of course, throughout ‘26 and beyond. It’s about being able to deliver through the drill bit in the existing assets and possibly additional assets, too.
Q4: Just turning to your main asset, how is drilling progressing in Vietnam?
A4: We are progressing well. We are almost halfway through that campaign. It’s a six well campaign, two appraisal wells and four infill wells and the reason I say that is because there is a slightly different risk-reward profile for the appraisal wells as there are the infill wells.
The good news is that it’s a well-known environment for us, we’ve been operating there for 20 years. We have a joint operating company model with ourselves, PetroVietnam and PTTEP, our Thai partner. So, there’s a well understood, very educated drilling process where we know the reservoirs, we know the structures. We have the infrastructure in place. Those wells can be tied in very quickly to existing infrastructure, there’ll be no need for a new platform or new infrastructure.
So, we feel confident about the campaign but as I say, we are midway through that and expect to finish hopefully towards the end of Q2 when we can provide a full update.
Q5: Finally, what does the Consolidated Concession Agreement in Egypt deliver?
A5: Just to reiterate that that’s an immediate uplift in value, mainly because of extra time with the assets. So, we’ve been given longevity to extract as much value from the assets as possible through time. Some improved fiscal commercial terms are also favourable. We saw an immediate uplift in reserves as a result of that agreed Concession Agreement, as I say, mainly through that extension of time and it’s really improved the economics for us when we look at reinvesting into a drilling campaign for 2026.
So, 2025 was a year of relatively minimal work in Egypt and I think with these new terms, including the motivation from our operator, that will help to deliver a little bit more work this year. Again, all with a view to increasing production and increasing that value that we can extract from the assets.
