Pharos Energy plc (LON:PHAR) and Ratio Petroleum Energy LP have announced that they have reached agreement on the terms of a recommended offer pursuant to which Ratio will acquire the entire issued and to be issued ordinary share capital of Pharos. The Acquisition is intended to be effected by means of a scheme of arrangement under Part 26 of the Companies Act.
· Under the terms of the Acquisition, Pharos Shareholders (where they qualified for the FY25 Final Dividend) will be entitled to receive a total value of up to 28 pence in cash per Pharos Share, comprising:
o 23.0683 pence in cash per Pharos Share; plus
o 4.0 pence in cash per Pharos Share by way of special dividend to be paid from Pharos’ existing cash resources that the board of directors of Pharos intends to declare prior to completion of the Acquisition with the record and payment dates aligned with the corresponding dates for determining entitlements to, and payment of, the Cash Consideration due to Pharos Shareholders under the terms of the Acquisition; plus
o 0.9317 pence in cash per Pharos Share by way of the final dividend for the financial year ended 31 December 2025 that was declared on 25 March 2026 and is payable on 17 July 2026 to qualifying Pharos Shareholders who were on the register as at close of business on 12 June 2026.
Shareholder support
· Ratio has received irrevocable undertakings to vote in favour of the Scheme at the Court Meeting and the resolutions to be proposed at the General Meeting from Pharos Shareholders in respect of a total of 171,470,348 Pharos Shares representing, in aggregate, approximately 41.19 per cent. of Pharos’ existing issued ordinary share capital on the Latest Practicable Date.
· Ratio has also received irrevocable undertakings from each of the Pharos Directors who hold Pharos Shares to vote in favour of the Scheme at the Court Meeting and the resolutions to be proposed at the General Meeting, in respect of a total of 2,380,289 Pharos Shares, representing approximately 0.57 per cent. of the existing issued ordinary share capital of Pharos on the Latest Practicable Date.
· Ratio has therefore received irrevocable undertakings in respect of a total of 173,850,637 Pharos Shares representing, in aggregate, approximately 41.76 per cent. of Pharos’ ordinary share capital in issue on the Latest Practicable Date.
· Further details of these irrevocable undertakings are set out in Appendix III to this announcement.
Background to and reasons for the recommendation
Background and strategic backdrop to the Acquisition
· Pharos operates a small portfolio of producing, development and exploration assets in Vietnam (the TGT and CNV producing fields and exploration Blocks 125 & 126) and Egypt (the El Fayum and North Beni Suef Concessions).
· Under the leadership of Katherine Roe (CEO) and the executive team, Pharos over the past two years has secured licence extensions in Vietnam, obtained improved fiscal terms in Egypt (subject to Egyptian Parliamentary ratification), repaid all debt and recovered all outstanding receivables from the Egyptian government.
· However, Pharos’ producing assets are mature, and hence the Pharos Directors have, over an extended period, been considering a number of strategic alternatives to add scale, strategic relevance and diversification to the portfolio. Various inorganic opportunities have been evaluated to try and deliver accretive long-term growth and improve the long-term positioning of the Pharos Group, given:
o the relative sub-scale nature of Pharos in a sector in which size, balance sheet flexibility and access to capital are increasingly critical to attract and execute material investment opportunities;
o the historical and persistent limited liquidity in Pharos’ Shares;
o the natural field decline at its mature TGT and CNV fields in Vietnam, and non-operated position at both El Fayum and North Beni Suef in Egypt; and
o the on-going challenges in securing a farm-in partner to enable the commitment drilling of an exploration well on Blocks 125/126.
The terms of the Acquisition and the process
· Having rejected a number of unsolicited proposals from Ratio earlier this year, since 4 March 2026, Pharos has provided information to Ratio in order to facilitate Ratio to conduct confirmatory due diligence. During this period of engagement heightened geopolitical volatility, including the outbreak of conflict in the Middle East, contributed to material movements in global commodity prices, leading to sector wide increases in E&P share prices. Against this backdrop, the Pharos Directors sought an improved offer from Ratio to reflect the strong cash flow generation driven by higher commodity prices and strong operational performance year to date. This improved offer was forthcoming on 8 June 2026, as per the terms outlined under “Summary” above.
· The agreed terms of the Acquisition delivers immediate and certain value in cash to Pharos Shareholders at a level which, in the unanimous view of the Pharos Directors, fairly reflects the future prospects of the business while removing the execution, commodity-price, operational, country and financing risks associated with the delivery of the standalone plan.
· In considering the Acquisition, the Pharos Directors have also assessed:
o the deliverability and certainty of the Cash Consideration, including the form, sources and committed nature of Ratio’s financing and the limited conditionality of the Acquisition; and
o the alternative strategic options available to Pharos, including continued execution of the existing standalone plan, with a focus on monetising Pharos’ high impact exploration prospect, accelerated M&A using equity or debt, a strategic combination with another listed peer, and a sale or partial monetisation of one or more of the Pharos Group’s assets, none of which the Pharos Directors believe is reasonably capable of delivering value to Pharos Shareholders in cash, in the near term, in excess of the Acquisition;
Strategic rationale for the Acquisition
· Since it was established more than ten years ago as a global exploration vehicle for the Wider Ratio Energies Group (which itself has been operating in the exploration and production business for more than three decades), Ratio’s strategy targets regions with substantial untapped potential where no significant petroleum discoveries have yet been made. Ratio has the risk appetite for exploration, has a strong exploration team with a robust track record and has access to, low cost capital to invest in exploration activities. Recently, a decision was made to also start investing in producing assets, and as such Ratio has identified Pharos as a significant opportunity.
· Ratio believes a combination of Ratio and Pharos has strong commercial and strategic rationale:
o the Acquisition represents a compelling liquidity event for existing Pharos Shareholders, providing them with an attractive opportunity to receive cash and realise their investments at a time when Pharos’ Shares otherwise lack material trading liquidity;
o the combination of Ratio and Pharos would create a strong exploration and production business with a portfolio of interests across multiple jurisdictions and basins especially in the current market; the significant reputational backing of, and option for financial support by, the Wider Ratio Energies Group will provide the credibility and low cost capital to support growth and the development of the Combined Group’s assets; and
o a combination of the two businesses shall permit greater economies of scale with a reduced overhead base.
Recommendation
· The Pharos Directors, who have been so advised by Rothschild & Co as to the financial terms of the Acquisition, consider the terms of the Acquisition to be fair and reasonable. In providing its advice to Pharos Directors, Rothschild & Co has taken into account the commercial assessments of the Pharos Directors. Rothschild & Co is providing independent financial advice to the Pharos Directors for the purposes of Rule 3 of the Code.
· Accordingly, the Pharos Directors intend to recommend unanimously that Pharos Shareholders vote in favour of the Scheme at the Court Meeting and the resolutions to be proposed at the General Meeting (or, in the event that the Acquisition is implemented by way of a Takeover Offer, to accept or procure acceptance of the Takeover Offer) as the Pharos Directors who hold Pharos Shares have irrevocably undertaken to do, as noted above, in respect of their own beneficial holdings of 2,380,289 Pharos Shares representing, in aggregate, approximately 0.57 per cent. of the ordinary share capital of Pharos in issue on the Latest Practicable Date.
Timetable and Conditions
· It is intended that the Acquisition will be implemented by way of a scheme of arrangement between Pharos and Pharos Shareholders under Part 26 of the Companies Act (although Ratio reserves the right to implement the Acquisition by way of a Takeover Offer, subject to the Panel’s consent and compliance with the Code).
· The Scheme shall be conditional on, among other things, the terms and Conditions set out in Appendix I to this announcement, including:
o the approval of the Scheme by a majority in number representing not less than 75 per cent. in value of the Scheme Shareholders who are on the register of members of Pharos at the Voting Record Time, in each case present and entitled to vote and voting, whether in person or by proxy, at the Court Meeting (or any adjournment of such meeting);
o the resolutions required to approve and implement the Scheme being duly passed by Pharos Shareholders representing the requisite majority or majorities of votes cast at the General Meeting (or any adjournment thereof);
o the satisfaction or waiver of the Regulatory Conditions in Vietnam and Egypt;
o the sanction of the Scheme by the Court with or without modification (but subject to any modification being on terms acceptable to Pharos and Ratio); and
o the delivery of a copy of the Court Order to the Registrar of Companies.
· Subject to the satisfaction or (where applicable) waiver of the Conditions, the Acquisition is expected to become Effective in H1 2027. The full terms and conditions of the Scheme and an expected timetable of principal events will be included in the Scheme Document.
· The Scheme Document, containing further information about the Acquisition and the Scheme and notices of the Court Meeting and the General Meeting, will be distributed to Pharos Shareholders (along with the Forms of Proxy for use in connection with the Court Meeting and the General Meeting) as soon as reasonably practicable and within 28 days of this announcement. The Scheme Document will also be made available by Pharos on its website at https://www.pharos.energy/investors/offer.
Commenting on the Acquisition, Katherine Roe, Chief Executive Officer of Pharos, said:
“Over the last 23 months, the team has put Pharos in a position where this all cash offer is possible. Vietnam production and exploration license extensions have been delivered alongside the execution of a successful six well drilling campaign. In Egypt we have consolidated the concession agreement delivering improved fiscal terms and importantly we have recovered all outstanding receivables in country. However, our producing assets are relatively mature and the future sustained growth of the business, which includes the exploration drilling of Blocks 125 and 126 in Vietnam needs significant investment from a scaled operator with an appetite for exploration risk, a track record of exploration success and with access to plentiful low cost capital.
Many of our major shareholders, most of which have been invested for very many years, require liquidity at this stage of the company’s development, as reflected in the 41.76% irrevocables received. This shareholder dynamic, alongside the advice on the financial terms of the Acquisition received from Rothschild & Co, means this is an offer which is recommended by the Pharos Board.”
Commenting on the Acquisition, Itay Raphael, Chief Executive Officer of Ratio, said:
“We are pleased to announce our recommended offer for Pharos today. A combination of Ratio with Pharos makes strong strategic sense, creating a balanced production and exploration company with the reputation, scale, balance sheet strength and technical capabilities to unlock further opportunities from a combined quality asset base. Together with the support of the wider Pharos Group, the enlarged company shall be a platform for future value growth.
We believe this cash offer provides an attractive outcome for the shareholders of Pharos, as witnessed by the strong level of irrevocables we received representing 41.76 per cent of Pharos’ issued share capital. Our offer provides the certainty of a cash return at an attractive premium to the long-term share price and gives Pharos’ shareholders liquidity for their shares which has not been available in recent trading.”
This summary should be read in conjunction with the full text of this announcement. The Acquisition shall be subject to the Conditions and further terms set out in Appendix I to this announcement and to the full terms and conditions which shall be set out in the Scheme Document. Appendix II to this announcement contains the sources of information and bases of calculations of certain information contained in this announcement, Appendix III contains a summary of the irrevocable undertakings received in relation to this Acquisition and Appendix IV contains definitions of certain expressions used in this summary and in this announcement.
RECOMMENDED ACQUISITION
of
Pharos Energy plc
by
Ratio Petroleum Energy LP
to be effected by means of a scheme of arrangement
under Part 26 of the Companies Act 2006
1 Introduction
The board of directors of each of Ratio and Pharos are pleased to announce that they have reached agreement on the terms of a recommended offer pursuant to which Ratio will acquire the entire issued and to be issued ordinary share capital of Pharos. The Acquisition is intended to be effected by means of a scheme of arrangement under Part 26 of the Companies Act.
2 The Acquisition
Under the terms of the Acquisition, Pharos Shareholders (where they qualified for the FY25 Final Dividend) will be entitled to receive a total value of up to 28 pence in cash per Pharos Share, comprising:
· 23.0683 pence in cash per Pharos Share; plus
· 4.0 pence in cash per Pharos Share by way of special dividend to be paid from Pharos’ existing cash resources that the board of directors of Pharos intends to declare prior to completion of the Acquisition with the record and payment dates aligned with the corresponding dates for determining entitlements to, and payment of, the Cash Consideration due to Pharos Shareholders under the terms of the Acquisition; plus
· 0.9317 pence in cash per Pharos Share by way of the final dividend for the financial year ended 31 December 2025 that was declared on 25 March 2026 and is payable on 17 July 2026 to qualifying Pharos Shareholders who were on the register as at close of business on 12 June 2026.
The aggregate value of the Cash Consideration and Special Dividend of 27.0683 pence per Pharos Share values the entire issued and to be issued share capital of Pharos at approximately £120.2 million, and represents:
· a premium of approximately 6.57 per cent. to the Closing Price of 25.4 pence per Pharos Share on 23 June 2026 (being the last Business Day prior to the date of this announcement);
· a premium of approximately 11.47 per cent. to the twelve-month volume weighted average price of 24.3 pence per Pharos Share on 23 June 2026 (being the last Business Day prior to the date of this announcement); and
· a premium of approximately 15.54 per cent. to the twenty-four-month volume weighted average price of 23.4 pence per Pharos Share on 23 June 2026 (being the last Business Day prior to the date of this announcement).
The total value of up to 28 pence per Pharos Share values the entire issued and to be issued share capital of Pharos at approximately £124.3 million, and represents:
· a premium of approximately 10.24 per cent. to the Closing Price of 25.4 pence per Pharos Share on 23 June 2026 (being the last Business Day prior to the date of this announcement);
· a premium of approximately 15.31 per cent. to the twelve-month volume weighted average price of 24.3 pence per Pharos Share on 23 June 2026 (being the last Business Day prior to the date of this announcement); and
· a premium of approximately 19.52 per cent. to the twenty-four-month volume weighted average price of 23.4 pence per Pharos Share on 23 June 2026 (being the last Business Day prior to the date of this announcement).
As noted above, Pharos Shareholders will continue to be entitled to receive and retain the previously declared FY25 Final Dividend and will also, pursuant to the terms of the Acquisition, be entitled to receive the Special Dividend.
If, on or after the date of this announcement and on or prior to the Effective Date, any dividend, distribution or other return of value is declared, made, or paid, or becomes payable by Pharos (other than the FY25 Final Dividend and the Special Dividend), Ratio reserves the right to reduce the Cash Consideration by an amount up to the amount of such dividend, distribution or other return of value in which case the reference to the Cash Consideration will be deemed to be a reference to the Cash Consideration as so reduced. In such circumstances, Pharos Shareholders shall be entitled to retain any such dividend, distribution, or other return of value declared, made, or paid.
It is expected that the Scheme Document containing further information about the Acquisition and the Scheme, and notices of the Court Meeting and the General Meeting, will be published as soon as reasonably practicable and, in any event, within 28 days of this announcement, unless Ratio and Pharos otherwise agree, and the Panel consents, to a later date. It is expected that the Court Meeting and the General Meeting shall be held in Q3 2026 and that, subject to the satisfaction or (where relevant) waiver of the Conditions, the Scheme shall become Effective in H1 2027.
3 Background to and reasons for the Acquisition
Ratio believes the Acquisition represents a compelling liquidity event for existing shareholders of Pharos, receiving a premium to the prevailing share price and providing them with a highly attractive opportunity to receive cash and realise their investments at a time when Pharos’ London-listed shares otherwise lack material trading liquidity.
Since it was established more than ten years ago as a global exploration vehicle for the Wider Ratio Energies Group (which itself has been operating in the exploration and production business for more than three decades), Ratio’s strategy targets regions with substantial untapped potential where no significant petroleum discoveries have yet been made. Recently, a decision was made to also start investing in producing assets, and as such has identified Pharos as a significant opportunity.
Ratio further believes a combination of Ratio and Pharos has strong commercial and strategic rationale:
· the combination of Ratio and Pharos would create a strong exploration and production business with a portfolio of interests across multiple jurisdictions and basins especially in the current market;
· the Acquisition represents a compelling liquidity event for existing shareholders of Pharos. The Acquisition will provide Pharos Shareholders with an immediate upfront realisation of value in cash for their Pharos Shares at a premium to the market price, and an opportunity to realise this value despite the limited liquidity in Pharos Shares;
· the significant reputational backing of, and option for financial support by, the Wider Ratio Energies Group will provide the credibility and capital to support growth and the development of the Combined Group’s assets; and
· a combination of the two businesses shall permit greater economies of scale with a reduced overhead base.
4 Background to and reasons for the recommendation
Background and strategic backdrop
Pharos is an independent upstream oil and gas company listed on the Main Market of the London Stock Exchange. Pharos operates a small portfolio of producing, development and exploration assets in Vietnam (the TGT and CNV producing fields and exploration Blocks 125 & 126) and Egypt (the El Fayum and North Beni Suef Concessions). Pharos has been admitted to the Official List since its formation as SOCO International plc in 1997 and rebranded as Pharos Energy plc in October 2019.
Under the leadership of Katherine Roe (CEO) and the executive team, Pharos over the past two years has secured licence extensions in Vietnam, obtained improved fiscal terms in Egypt (subject to Egyptian Parliamentary ratification), repaid all debt and recovered all outstanding receivables from the Egyptian government.
Pharos has continued to deliver on this strategy in recent years, most recently increasing its full-year dividend for the 2025 financial year by 10%, supported by strong cash flow and a debt-free balance sheet.
However, Pharos’ producing assets are relatively mature, and hence the Pharos Directors have, over an extended period, been considering a number of strategic alternatives to add scale, strategic relevance and diversification to the portfolio. Various inorganic opportunities have been evaluated to try and deliver accretive long-term growth and improve the long-term positioning of the Pharos Group, given:
· the relative sub-scale nature of Pharos in a sector in which size, balance sheet flexibility and access to capital are increasingly critical to attract and execute material investment opportunities;
· the historical and persistent limited liquidity in Pharos’ Shares;
· the natural field decline at TGT and CNV in Vietnam, and non-operated position at both El Fayum and North Beni Suef in Egypt; and
· the on-going challenges in securing a farm-in partner to enable the commitment drilling of an exploration well on Blocks 125/126.
The terms of the Acquisition and the process
Earlier this year, Pharos received unsolicited proposals from Ratio at 23.5 pence and 24.5 pence per Pharos Share. These proposals were each carefully evaluated by Pharos, together with its financial adviser, Rothschild & Co, and unanimously rejected by the Pharos Board.
On 25 February 2026, Pharos received a revised proposal from Ratio at 25 pence per Pharos share (the “Third Proposal“). The Third Proposal (consistent with the earlier proposals) was subject to satisfaction or waiver of a number of customary pre-conditions, including undertaking of satisfactory due diligence. At the time of the Third Proposal, Pharos’ share price was at 24 pence and hence the Pharos Board decided to share information with Ratio pursuant to the terms of a non-disclosure agreement such that Ratio could firm up its view of value.
Since 4 March 2026, Pharos has provided information to Ratio in order to facilitate Ratio to conduct confirmatory due diligence. During this period of engagement heightened geopolitical volatility, including the outbreak of conflict in the Middle East, contributed to material movements in global commodity prices, leading to sector wide increases in E&P share prices. Against this backdrop, the Pharos Directors sought an improved offer from Ratio to reflect the strong cash flow generation driven by higher commodity prices and strong operational performance year to date.
Following discussions over the last few weeks, Pharos received a further improved proposal from Ratio, in which Pharos Shareholders (where they qualified for the FY25 Final Dividend) will be entitled to receive a total value of up to 28 pence in cash per Pharos Share, comprising:
· 23.0683 pence in cash per Pharos Share (the “Cash Consideration“); plus
· 4.0 pence in cash per Pharos Share by way of special dividend to be paid from Pharos’ existing cash resources that the board of directors of Pharos intends to declare prior to the completion of the Acquisition with the record and payment dates aligned with the corresponding dates for determining entitlements to, and payment of, Cash Consideration due to Pharos Shareholders under the terms of the Acquisition (the “Special Dividend“); plus
· 0.9317 pence in cash per Pharos Share by way of the final dividend for the financial year ended 31 December 2025 that was declared on 25 March 2026 and is payable on 17 July 2026 to qualifying Pharos Shareholders who were on the register as at close of business on 12 June 2026 (the “FY25 Final Dividend” and together with the Special Dividend the “Permitted Dividends“), without any reduction in the Cash Consideration they are entitled to receive under the terms of the Acquisition.
Value delivered by the Acquisition
Including the Permitted Dividends, the terms of the Acquisition value the entire issued and to be issued ordinary share capital of Pharos at approximately £124.3 million. The terms of the Acquisition deliver immediate, certain value in cash to Pharos Shareholders at a level which, in the unanimous view of the Pharos Directors, fairly reflects the future prospects of the business while removing the execution, commodity-price, operational, country and financing risks associated with the delivery of the standalone plan.
In considering the terms of the Acquisition, the Pharos Directors have also assessed:
· the deliverability and certainty of the Cash Consideration, including the form, sources and committed nature of Ratio’s financing and the limited conditionality of the Acquisition; and
· the alternative strategic options available to Pharos, including continued execution of the existing standalone plan, with a focus on monetising Pharos’ high impact exploration prospect, accelerated M&A using equity or debt, a strategic combination with another listed peer, and a sale or partial monetisation of one or more of the Pharos Group’s assets, none of which the Pharos Directors believe is reasonably capable of delivering value to Pharos Shareholders in cash, in the near term, in excess of the value delivered under the terms of the Acquisition;
Accordingly, whilst Pharos has strong standalone prospects, following careful consideration of the above factors, the Pharos Board believes the Acquisition is in the best interests of Pharos Shareholders and intends to recommend unanimously the Acquisition to Pharos Shareholders.
5 Recommendation
The Pharos Directors, who have been so advised by Rothschild & Co as to the financial terms of the Acquisition, consider the terms of the Acquisition to be fair and reasonable. In providing its advice to Pharos Directors, Rothschild & Co has taken into account the commercial assessments of the Pharos Directors. Rothschild & Co is providing independent financial advice to the Pharos Directors for the purposes of Rule 3 of the Code.
Accordingly, the Pharos Directors intend to recommend unanimously that Pharos Shareholders vote in favour of the Scheme at the Court Meeting and the resolutions to be proposed at the General Meeting (or, in the event that the Acquisition is implemented by way of a Takeover Offer, to accept or procure acceptance of the Takeover Offer) as the Pharos Directors who hold Pharos Shares have irrevocably undertaken to do in respect of their own beneficial holdings of 2,380,289 Pharos Shares representing, in aggregate, approximately 0.57 per cent. of the ordinary share capital of Pharos in issue on the Latest Practicable Date.
6 Irrevocable undertakings
As noted above, Ratio has received irrevocable undertakings from each of the Pharos Directors who hold Pharos Shares to vote in favour of the Scheme at the Court Meeting and the resolutions to be proposed at the General Meeting (or, in the event that the Acquisition is implemented by way of a Takeover Offer, to accept or procure acceptance of the Takeover Offer), in respect of a total of 2,380,289 Pharos Shares, representing approximately 0.57 per cent. of the existing issued ordinary share capital of Pharos on the Latest Practicable Date.
Ratio has also received irrevocable undertakings to vote in favour of the Scheme at the Court Meeting and the resolutions to be proposed at the General Meeting (or, in the event that the Acquisition is implemented by way of a Takeover Offer, to accept or procure acceptance of the Takeover Offer) from Pharos Shareholders in respect of a total of 171,470,348 Pharos Shares representing, in aggregate, approximately 41.19 per cent. of Pharos’ existing issued ordinary share capital on the Latest Practicable Date.
Ratio has therefore received irrevocable undertakings in respect of a total of 173,850,637 Pharos Shares representing, in aggregate, approximately 41.76 per cent. of Pharos’ existing issued ordinary share capital in issue on the Latest Practicable Date.
7 Information on Ratio and Wider Ratio Group
With longstanding roots in Israel’s business and innovation landscape, the Wider Ratio Energies Group is a dynamic investment and development group of companies active across the energy, technology, industrial and real-estate sectors. Having been active in the Israeli business sector since the early days of the state, the Landau and Rotlevy families brought decades of entrepreneurial experience and leadership into the founding of the Wider Ratio Energies Group over thirty years ago.
Ratio Energies is one of Israel’s leading energy partnerships, founded in 1992 with a mission to explore, develop, and produce natural gas and oil in the Eastern Mediterranean Basin. The partnership was established by the Landau and Rotlevy families, together with Mr. Eitan Eisenberg, Ratio Energies’ geologist who played a key role in identifying the Leviathan discovery. In 2010, Ratio Energies and its partners discovered Leviathan – one of the world’s largest deepwater natural gas finds and the largest in the Mediterranean sea, with estimated reserves of approximately 22 TCF (about 631 BCM) of natural gas and 49 million barrels of condensate. By the end of December 2019, less than three years after the partners (Ratio Energies, NewMed Energy, and Noble Energy (later purchased by Chevron)) took the Final Investment Decision (“FID“), production from the Leviathan reservoir began, supplying gas to the Israeli domestic market. Just a month later exports to Jordan and Egypt commenced, with Leviathan representing a strategic and substantial supplier of gas to Egypt. Production launched on schedule, following a total investment of US$3.8 billion. Furthermore, in January 2026 Ratio Energies and its partners took FID on a further US$2.4 billion investment programme to expand Leviathan’s production capacity to 21 BCM per annum. With deep regional knowledge, Ratio Energies believes in the potential for additional discoveries in the Eastern Mediterranean and continues to explore new prospects and forge strategic partnerships.
Ratio Energies holds a 20% stake in Ratio, a partnership focused on international oil and gas exploration. Ratio Petroleum Limited was founded more than ten years ago and later acquired by Ratio as part of a group reorganisation. Ratio, which listed in 2017, is incorporated under the laws of Israel with its head office located in Tel Aviv.
Ratio was established by some of the original founders of Ratio Energies in order to establish a business which would conduct oil and gas exploration worldwide. Ligad Rotlevy is chairman of the boards of the general partners of both Ratio Energies and Ratio and together with Yigal Landau, CEO of Ratio Energies and founder, they are/or their families are the controlling unitholders of both partnerships.
Ratio’s strategy targets regions with substantial untapped potential where no significant petroleum discoveries have yet been made, like the Levant Basin prior to the Leviathan and Tamar discoveries. This strategy has already proven successful in the Guyana Basin, now widely regarded as one of the world’s most sought after regions for oil exploration, development, and production. From 2015 to now, over 20 discoveries in the basin have found over 12 billion barrels of oil. At the beginning of 2021, the business announced the Tanager-1 discovery in the Kaieteur Block offshore Guyana, with proven reserves of 65 million barrels of oil.
Ratio currently holds petroleum interests in three different basins on opposite sides of the world: Guyana, Morocco Atlantic and the East Palawan Basin in the Philippines. The total area of Ratio’s interests is approx. 130,000 sq km. Ratio continues to search for more assets and investment opportunities around the world.
Ratio maintains relationships with leading universities and research centres in Israel. These collaborations enable Ratio to be at the forefront of research and to also be exposed to technological developments in areas such as geophysics, geology, and various engineering fields.
Ratio has strong fundraising capabilities across both debt and equity capital markets, supported by well-established relationships with Israeli banks and financial institutions. The Wider Ratio Energies Group has worked and continues to work alongside some of the world’s leading energy companies, including Chevron, ExxonMobil, Hess, Dana Petroleum, Navitas Petroleum and NewMed Energy.
8 Information on Pharos
Pharos is an independent energy company listed on the Main Market of the London Stock Exchange (LSE: PHAR). The Pharos Group is focused on delivering sustainable growth and returns through a full-cycle portfolio of production, development, and exploration assets in Vietnam (Cuu Long and Phu Khanh basins) and Egypt (Western Desert).
In Vietnam, Pharos holds working interests in the Te Giac Trang (“TGT“) and Ca Ngu Vang (“CNV“) fields, which are among the country’s largest oil producers. It also holds a 70 per cent. operated interest in the deep-water exploration Blocks 125 & 126 in the Phu Khanh basin. As of year-end 2025, Pharos’ 2P reserves in the country stand at ~7.2 mmboe, and 2C contingent resources stand at ~7.8 mmboe. 2026 production guidance in Vietnam ranges between 4,000 – 4,950 boepd.
In Egypt, the Pharos Group maintains a 45 per cent. working interest in the El Fayum and North Beni Suef (NBS) Concessions. As of year-end 2025, Pharos holds 2P reserves of 11.2 mmbl and 2C contingent resources of 9.0 mmbl. 2026 production guidance in Egypt ranges between 1,200 – 1,450 bopd.
The Pharos Group achieved 5,398 boepd net production in 2025, and US$114.6 million of revenues.
9 Strategic plans, management, employees, pensions, research and development and locations
Strategic plans
Ratio believes that the Acquisition adds stable production and development assets and further exploration assets which complement those already in its portfolio, positioning the Combined Group as a platform for growth. Ratio intends to combine Ratio’s and Pharos’ portfolio of assets into a combined operating structure to best manage the producing assets, and the development and exploration portfolio, and does not intend to make any material changes to Pharos’ in country operations as a result. Ratio intends to explore the possibility of selling down part of Pharos’ interest in its Egyptian operations to a third-party partner in order to strengthen and expand the existing consortium. Additionally, the significant reputational and financial backing of the Wider Ratio Energies Group of companies, including established banking and industry relationships, will provide the credibility and capital to support growth and the development of the Combined Group’s assets.
Ratio believes that the Combined Group will provide opportunities for the management and employees of both companies, as enhanced growth prospects will be presented from the combination of the two companies.
Ratio intends to complete a detailed review to determine an integration plan and the optimal operating and divisional structure for the Combined Group, which it intends to consider and confirm the potential to consolidate business and operating locations and the extent of duplication of functions. Ratio intends that this will be completed within six months of the Effective Date and will focus on evaluating the technical, operations supervision, central, management and support functions of Pharos to reduce the combined overheads and generate increased cashflows for the business.
Board, management and employees
Ratio attaches importance to the skills and experience of Pharos’ employees and believes there is a strong understanding of Pharos’ sector, geology, asset base and operating environment within the Pharos organisation. Ratio recognises the significant contribution made by Pharos’ employees to Pharos’ development to date and the contribution they can continue to have to the long-term success of the Combined Group moving forward. Ratio therefore intends to build the combined business by drawing on upon the best blend of skills and experience of Pharos’ employees.
Ratio’s review of Pharos’ operations intends to encompass developing a full understanding of exactly the roles and tasks undertaken by each employee to determine the efficiencies which can be generated.
Ratio intends that Pharos’ in country teams will continue to oversee its current producing assets. During Ratio’s preliminary due diligence, it was found that there will be a level of duplication within certain functions, largely the finance function, as well as those relating to Pharos being a listed business. Ratio therefore intends, pending completion of its review, that in those specific areas there may be headcount reduction in order to eliminate duplication of roles and create a single central, technical, operational, management and administrative support function for the Combined Group, to realise potential synergies going forwards and create an appropriate fixed overhead base. Ratio intends that in the finance function, roles in the UK head office and those roles related to Pharos being a listed business, headcount reductions will represent a material number of Pharos’ employees and management. A sell down of part of Pharos’ interest in its Egyptian operations could, if implemented, affect this review and could result in a material headcount reduction. In the context of the review referred to above, any specific proposals as to restructuring of operations and functions would only be confirmed after this review has been completed.
Prior to implementation of any of the above proposals, Ratio will consult with Pharos employees on the impact of any of its proposals, including but not limited to any potential headcount reductions, in accordance with applicable law.
Subject to agreeing terms, it is envisaged that the non-executive directors of Pharos will depart the business on completion of the Acquisition and the executive directors will depart the business following an orderly handover intended to take no longer than six months.
Save as set out above, Ratio has no intention to make any material change to the balance of skills and functions of the employees and management of the Combined Group.
Save for any headcount reductions arising as a result of the review of duplication within certain functions, the closure of Pharos’ head office function, synergy analysis (that will take place following the Acquisition becoming Effective) and the potential departure of directors, Ratio does not intend to make any changes to the conditions of employment of Pharos employees or to the balance of skills and functions of Pharos employees and management. Ratio also confirms that following the Acquisition completing, the existing contractual and statutory employment rights of Pharos’ management team and employees will be fully safeguarded.
Ratio has not entered into and has not had discussions regarding proposals to enter into, any form of incentivisation or any other arrangements with members of Pharos’ management. Ratio does not intend to have such discussions with management before the Acquisition becomes Effective.
Pension schemes
Ratio does not intend to make any changes, unless required to do so by applicable law, to the agreed employer contributions into Pharos’ existing defined contribution pension schemes (including with regard to current arrangements for the funding of any scheme deficit in the defined benefit pension scheme), the level of benefits for existing members or the admission of new members to such pension schemes following the Effective Date.
Place of business, headquarters, fixed assets, research and development
Ratio intends to integrate Pharos’ headquarter functions with those of the Wider Ratio Group following completion of the Acquisition, as such, Pharos’ headquarters’ will move to Ratio’s offices in Tel Aviv, Israel and Pharos’ UK headquarters will be closed
Prior to implementation of any of the above proposals, Ratio will consult with Pharos employees on the impact of any of its proposals, including but not limited to any potential headcount reductions, in accordance with applicable law.
Ratio will consider the most appropriate timing and strategy for the consolidation of Pharos’ UK headquarters as part of its review but intends this move to occur within six months following the Acquisition becoming Effective. As noted above, Ratio does not intend to make any changes to the locations of Pharos’ overseas operations.
Pharos does not have a research and development function and Ratio has no plans in this regard.
Ratio does not intend to make any material changes with respect to the deployment of Pharos’ fixed asset base (save for relocating Pharos’ headquarters as noted above).
Trading facilities
It is intended that dealings in, and registration of transfers of, Pharos Shares (other than the registration of the transfer of the Scheme Shares to Ratio pursuant to the Scheme) will be suspended shortly before the Effective Date at a time to be set out in the Scheme Document. It is further intended that applications will be made to the London Stock Exchange to cancel the trading in the Pharos Shares on the Main Market, and to the FCA to cancel the listing of the Pharos Shares on the Equity Shares (Commercial Companies) category of the Official List, in each case with effect from or shortly following the Effective Date. Further details about the delisting and cancellation of trading of the Pharos Shares can be found in paragraph 16 of this announcement. It is intended that Pharos be re‑registered as a private limited company as soon as practicable following the cancellation of the listing and trading of Pharos Shares.
Post-offer undertakings
No statements in this paragraph 9 are “post-offer undertakings” for the purposes of Rule 19.5 of the Code.
10 Pharos Share Plans
Participants in the Pharos Share Plans will be contacted regarding the effect of the Acquisition on their rights under the Pharos Share Plans. Pharos and Ratio have agreed that Ratio will make appropriate proposals to participants in the Pharos Share Plans in accordance with Rule 15 of the Code.
Further details of these arrangements will be set out in the Scheme Document.
11 Dividends
As noted above, Pharos Shareholders will continue to be entitled to receive and retain the previously declared FY25 Final Dividend and will also, pursuant to the terms of the Acquisition, be entitled to receive the Special Dividend.
If, on or after the date of this announcement and on or prior to the Effective Date, any dividend, distribution or other return of value is declared, made, or paid, or becomes payable by Pharos (other than the FY25 Final Dividend and the Special Dividend), Ratio reserves the right to reduce the Cash Consideration by an amount up to the amount of such dividend, distribution or other return of value in which case the reference to the Cash Consideration will be deemed to be a reference to the Cash Consideration as so reduced. In such circumstances, Pharos Shareholders shall be entitled to retain any such dividend, distribution, or other return of value declared, made, or paid.
12 Financing of the Acquisition
In order to enable Shore Capital, in its capacity as financial adviser to Ratio, to give the confirmation referred to in Rule 2.7(d) of the Code, an irrevocable letter of credit dated 23 June 2026 (“LoC“) from Israel Discount Bank Ltd, applied for by Ratio Energies, has been made available in favour of Ratio as beneficiary.
It is eventually intended that the Cash Consideration to be payable by Ratio to Pharos Shareholders under the terms of the Acquisition may be funded, to the extent available to Ratio, through a combination of some or all of the following: a debt raising and/or a capital raising and/or bank financing. If any such alternative financing arrangements materialise, a further announcement will be made at the appropriate time.
Shore Capital, in its capacity as financial adviser to Ratio, is satisfied that sufficient cash resources are available to Ratio to satisfy in full the Cash Consideration payable by Ratio to Pharos Shareholders pursuant to the Acquisition.
13 Offer-related arrangements
Pharos Confidentiality Agreement
Ratio and Pharos entered into a confidentiality agreement dated 4 March 2026 pursuant to which Ratio has undertaken to Pharos, amongst other things: (i) to keep information relating to Pharos and the Acquisition strictly confidential and not to disclose it to any person except as permitted by the terms of the Pharos Confidentiality Agreement; and (ii) to use such confidential information solely for the purpose of evaluating, negotiating, advising upon, implementing or arranging financing (or underwriting in respect of such financing) for the Acquisition.
Ratio’s obligations under the Pharos Confidentiality Agreement, unless otherwise specified, remain in force for a period of 18 months from the date of the Pharos Confidentiality Agreement. The Pharos Confidentiality Agreement also contains standstill provisions restricting Ratio, Ratio’s group undertakings and its concert parties from, amongst other things, acquiring or offering to acquire interests in Pharos Shares. Those standstill restrictions ceased to apply on the making of this announcement.
The Pharos Confidentiality Agreement also contains customary non-solicitation provisions with regard to certain of Pharos’ employees, customers and suppliers which will remain in force for a period of 12 months from the date of the Pharos Confidentiality Agreement.
Ratio Confidentiality Agreement
Ratio and Pharos entered into a confidentiality agreement dated 12 March 2026 pursuant to which Pharos has undertaken to Ratio, amongst other things: (i) to keep information relating to Ratio and the Acquisition strictly confidential and not to disclose it to any person except as permitted by the terms of the Ratio Confidentiality Agreement; and (ii) to use such confidential information solely for the purpose of evaluating, negotiating, advising upon or implementing the Acquisition.
Pharos’ obligations under the Ratio Confidentiality Agreement, unless otherwise specified, remain in force for a period of 18 months from the date of the Ratio Confidentiality Agreement.
The Ratio Confidentiality Agreement also contains customary non-solicitation provisions with regard to certain of Ratio’s employees, customers and suppliers which will remain in force for a period of 12 months from the date of the Ratio Confidentiality Agreement.
Cooperation Agreement
Ratio and Pharos have entered into a Cooperation Agreement pursuant to which:
· Ratio has agreed to use all reasonable efforts to ensure that the Regulatory Conditions are fulfilled as soon as practicable and, in any event, in sufficient time to enable to Effective Date to occur before the Long-stop Date;
· Ratio has agreed to have primary responsibility for obtaining any regulatory approvals and clearances, subject to Pharos consulting and updating Ratio to a reasonable extent;
· Pharos and Ratio have agreed to certain customary undertakings to co-operate in relation to such Regulatory Conditions; and
· Ratio has agreed to provide Pharos with certain information as may be reasonably requested and is required for the Scheme Document.
The Cooperation Agreement records the intention of Pharos and Ratio to implement the Acquisition by way of the Scheme, subject to Ratio’s right to switch to a Takeover Offer in certain circumstances. Pharos and Ratio have agreed to certain customary provisions if the Scheme should switch to a Takeover Offer.
The Cooperation Agreement also contains certain provisions that shall apply in respect of the Pharos Share Plans and certain other employee-related matters.
The Cooperation Agreement shall be terminated with immediate effect:
· if Pharos and Ratio so agree in writing at any time prior to the Effective Date;
· if this announcement is not released at or before 5.00 p.m. on 24 June 2026 (unless otherwise agreed between Pharos and Ratio prior to that time);
· if the Acquisition, with the permission of the Panel (where required), lapses (or is withdrawn by Ratio), other than: (i) as a result of Ratio’s right to switch to a Takeover Offer; or (ii) it is otherwise to be followed within 10 Business Days by a Rule 2.7 announcement made by Ratio or a concert party to implement the Acquisition by a different offer or scheme on substantially the same or improved terms;
· upon service of written notice by Ratio to Pharos if, amongst other things, the Pharos Board withdraws, adversely qualifies or modifies its recommendation or recommends a competing offer;
· if a competing offer by a third party is announced under Rule 2.7 of the Code or Pharos announces that it or any member of its group has entered into agreement(s) to effect a competing offer;
· upon service of written notice by Ratio to Pharos if the Acquisition is being implemented by way of the Scheme and (i) the Scheme Document is not posted within 28 days of the date of this Announcement (subject to exceptions); (ii) the Court Meeting, General Meeting and/or the Court Sanction Hearing is not held on or before the 22nd day after the expected date set out in the Scheme Document (or such later date as may be determined by Ratio with the agreement of Pharos or, in a competitive situation, with the consent of the Panel); (iii) the Scheme is not approved by the requisite majority of Pharos Shareholders at the Court Meeting or the Pharos resolutions are not passed by the requisite majority of Pharos Shareholders at the General Meeting; or (iv) the Scheme is not sanctioned at the Court Sanction Hearing; or
· if the Effective Date has not occurred on or before the Long-stop Date.
14 Structure of and Conditions to the Acquisition
It is intended that the Acquisition will be effected by means of a Court-approved scheme of arrangement between Pharos and Pharos Shareholders under Part 26 of the Companies Act although Ratio reserves the right to implement the Acquisition by means of a Takeover Offer (subject to Panel consent and in compliance with the Code).
A Scheme of Arrangement is a formal arrangement between Pharos and its shareholders, which is governed by the Companies Act. The Scheme of Arrangement must be approved both by the Pharos Shareholders and the Court.
If approved by the requisite majorities of Pharos Shareholders and sanctioned by the Court, upon becoming Effective, the Scheme will bind all Pharos Shareholders (regardless of whether or not they attended or voted at the Court Meeting or the General Meeting (and if they attended and voted, in what way they voted)). The purpose of the Scheme is to provide for Ratio to become the holder of the entire issued ordinary share capital of Pharos. This is to be achieved by the transfer of the Pharos Shares to Ratio, in consideration for which the Pharos Shareholders shall receive the consideration on the basis set out in paragraph 2 of this announcement. The Cash Consideration and Special Dividend payable under the terms of the Acquisition will be despatched to Pharos Shareholders no later than 14 days after the Effective Date.
The Scheme shall be subject to the Conditions and further terms set out below and in Appendix I to this announcement and the full terms and conditions to be set out in the Scheme Document and shall only become Effective, if, among other things, the following events occur on or before 11.59 p.m. on the Long-stop Date:
a) the approval of the Scheme by a majority in number representing not less than 75 per cent. in value of the Scheme Shareholders who are on the register of members of Pharos at the Voting Record Time, in each case present and entitled to vote and voting, whether in person or by proxy, at the Court Meeting (or any adjournment of such meeting);
b) the resolutions required to approve and implement the Scheme being duly passed by Pharos Shareholders representing the requisite majority or majorities of votes cast at the General Meeting (or any adjournment thereof);
c) the satisfaction or waiver of the Regulatory Conditions in Vietnam and Egypt;
d) the sanction of the Scheme by the Court (with or without modification but subject to any modification being on terms acceptable to Pharos and Ratio); and
e) the delivery of a copy of the Court Order to the Registrar of Companies.
The Scheme will lapse if:
· the Court Meeting and the General Meeting are not held by the 22nd day after the expected date of such meetings to be set out in the Scheme Document in due course (or such later date, if any, as: (x) Ratio and Pharos may agree; or (y) (in a competitive situation), Ratio may specify with the consent of the Panel, and in each case, if required, that the Court may allow);
· the Court Sanction Hearing is not held by the 22nd day after the expected date of such hearing to be set out in the Scheme Document (or such later date, if any, as: (x) Ratio and Pharos may agree; or (y) (in a competitive situation) Ratio may specify with the consent of the Panel and in each case, if required, that the Court may allow); or
· the Scheme does not become Effective by no later than 11.59 p.m. on the Long-stop Date.
Subject to satisfaction (or waiver, where applicable) of the Conditions, the Scheme is expected to become Effective in H1 2027.
The Acquisition does not require the approval of the shareholders of Ratio.
Further details of the Scheme, including an indicative timetable for its implementation, will be set out in the Scheme Document which shall be distributed to Pharos Shareholders (along with the Forms of Proxy for use in connection with the Court Meeting and the General Meeting) in due course, and in any event within 28 days from the date of this announcement.
15 Disclosure of Interests in Pharos
Save in respect of the irrevocable undertakings referred to in paragraph 6 above, as at the close of business on the Latest Practicable Date neither Ratio, nor any of its directors, nor, so far as Ratio is aware, any person acting in concert (within the meaning of the Code) with it has neither:
i. any interest in or right to subscribe for any relevant securities of Pharos;
ii. any short positions in respect of relevant Pharos Shares (whether conditional or absolute and whether in the money or otherwise), including any short position under a derivative, any agreement to sell or any delivery obligation or right to require another person to purchase or take delivery;
iii. any Dealing Arrangement, in relation to Pharos Shares or in relation to any securities convertible or exchangeable into Pharos Shares; or
iv. borrowed or lent any relevant Pharos Shares (including, for these purposes, any financial collateral arrangements of the kind referred to in Note 4 on Rule 4.6 of the Code), save for any borrowed shares which had been either on-lent or sold.
‘Interests in securities’ for these purposes arise, in summary, when a person has long economic exposure, whether absolute or conditional, to changes in the price of securities (and a person who only has a short position in securities is not treated as interested in those securities). In particular, a person shall be treated as having an ‘interest’ by virtue of the ownership, voting rights or control of securities, or by virtue of any agreement to purchase, option in respect of, or derivative referenced to, securities and ‘relevant securities of Pharos’ are Pharos Shares or securities convertible or exchangeable into Pharos Shares.
It has not been practicable for Ratio to make enquiries of all of its concert parties in advance of the release of this announcement. Therefore, all relevant details in respect of Ratio’s concert parties shall be included in the Opening Position Disclosure in accordance with Rule 8.1(a) and Note 2(a)(i) on Rule 8 of the Code.
16 Delisting of Pharos Shares
Prior to the Scheme becoming Effective, it is intended that Pharos will make an application to the London Stock Exchange to cancel trading in the Pharos Shares on the Main Market and to the FCA to cancel the listing of the Pharos Shares from the Equity Shares (Commercial Companies) category of the Official List, in each case with effect from shortly after the Effective Date. It is intended that dealings in, and registrations of transfers of, Pharos Shares (other than the registration of the transfer of the Scheme Shares to Ratio pursuant to the Scheme) will be suspended shortly prior to the Effective Date at a time to be set out in the Scheme Document.
On the Effective Date, Pharos will become a wholly-owned subsidiary of Ratio and share certificates in respect of Pharos Shares will cease to be valid and should be destroyed. In addition, entitlements to Pharos Shares held within the CREST system will be cancelled on the Effective Date.
Upon the Scheme becoming Effective, Ratio (and/or its nominee(s)) will acquire the Scheme Shares fully paid and free from all liens, equitable interests, charges, encumbrances and other third party rights of any nature whatsoever and together with all rights attaching to them including the right to receive and retain all dividends and distributions (if any) declared after the Effective Date.
17 General
Ratio reserves the right to elect (with the consent of the Panel and in compliance with the Code) to implement the Acquisition by way of a Takeover Offer for the Pharos Shares as an alternative to the Scheme. In such event, the Takeover Offer shall be implemented on the same terms, so far as applicable, as those which would apply to the Scheme, subject to appropriate amendments, including (without limitation) an acceptance condition set at a level permitted by the Panel.
The Acquisition shall be made subject to the Conditions and further terms set out in Appendix I to this announcement and to be set out in the Scheme Document. The bases and sources of certain financial information contained in this announcement are set out in Appendix II to this announcement. A summary of the irrevocable undertakings given in relation to the Acquisition is contained in Appendix III to this announcement. Certain terms used in this announcement are defined in Appendix IV to this announcement.
The Scheme Document, containing further information about the Acquisition and notices of the Court Meeting and the General Meeting will be distributed to Pharos Shareholders (along with the Forms of Proxy for use in connection with the Court Meeting and the General Meeting) in due course, and in any event within 28 days of the date of this announcement. The Scheme Document and Forms of Proxy shall be made available to all Pharos Shareholders at no charge to them.
Shore Capital and Rothschild & Co have each given and not withdrawn their consent to the publication of this announcement with the inclusion herein of the references to their names in the form and context in which they appear.
18 Documents available on website
Copies of the following documents will be made available on Ratio’s and Pharos’ websites at https://ratiopetroleum.com/Offer-disclaimer/ and https://www.pharos.energy/investors/offer respectively until the Effective Date:
· this announcement;
· the Pharos Confidentiality Agreement, the Ratio Confidentiality Agreement and the Cooperation Agreement referred to in paragraph 13 above;
· the irrevocable undertakings referred to in paragraph 6 above and summarised in Appendix III to this announcement;
· the LoC; and
· the consent letters from Shore Capital and Rothschild & Co referred to in paragraph 17 above.
The contents of the websites referred to in this announcement and any websites accessible from hyperlinks on these websites are not incorporated into and do not form part of this announcement.
