Pharos Energy (LSE:PHAR) — Interim Results

0:00 Good afternoon, and welcome to the PHAROS ENERGY PLC Interim Results Investor Presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged, and they can be submitted at any time using the Q and 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 received during the meeting itself. However, the company can review all questions submitted today and publish responses, which is appropriate to do so. Before we begin, I would like to submit the following poll. And I would now like to hand you over to CEO, Catherine Rowe. Good afternoon to you. Thanks. Thank you, and good afternoon to everybody. Thank you very much for taking the time this afternoon to attend our interim results presentation.

0:46 My first presentation, as PHAROS CEO having joined the company on the July 1. I'm joined today, by my team, Moe Saeed, our COO, recently appointed, as chief operating officer, but having been with PHAROS for a number of years. Our CFO, Sue Rivet, again, well established and and been with the business for for many years. And Minh An, our ESG sustainability and IR lead, who work we we work very closely on, with our sustainability policy.

1:20 I'd like to just introduce myself for those who do not know me. I was previously the CEO of a gas producing business in Tanzania called Wentworth Resources. I was with that business for a number of years, and as I said, most recently, as CEO for for the last four years. That company received a recommended cash offer for Morrowind Prom and was sold to Morrowind Prom at the end of last year. And I'm embracing my new role having joined PHAROS ENERGY in the July 1. It has been, just a couple of months for me, but I think we've achieved a lot in terms of working together as a team. And, hopefully, today, giving you a summary of where we are and what we're looking forward to, going forward.

2:10 So I'll just start off with the first slide. Thanks, Milan. I think what I what I wanted to do, and to to for all of you today was to to set the scene with some early observation since since I joined, the business back in July. Really found a a transformed business, having had a couple of challenging years, and seeing some decisions made, in order to sustain the business and put it on a firm foundation, for future growth, which is where we're at today. So we have a solid foundation, from which to move forward, and that's very much the the focus and theme, of today's presentation. I found a very impressive team. I'm really grateful for the dedicated loyal team and the work that they do, and I've I've really had a sense of those strong in country relationships that are so critical to a business like ours.

3:04 I've already had the opportunity to meet the team in Egypt, and particularly the new minister of energy in Egypt and the CEO of EGPC, our regulator in country. And and why that's important, we'll come on to you later just to demonstrate the strength of those relationships and how that's tangibly translated into an improvement in the receivables position. And just to give you a flavor, we've received more than $20,000,000 year to date in our receivables. So we have solid assets like again from Vietnam as well to two jurisdictions, with production and exploration potential. Those assets are solid and stable and have been able to produce reliable cash flow, which in turn enables us to continue that sustained dividend policy.

3:58 And we're delighted to announce today with the results that we are intending to declare an interim dividend, with a 10% increase. And we do have a very clear and transparent policy on the dividend. We hope that that grows as operating cash flow grows. So there's a very strong set of financials. I think what has also happened since the end of the the the half year, the the reporting period, we have now fully repaid all of our outstanding debt. And we did have a a legacy RBL and a facility with National Bank of Egypt, and we've been able to fully repay those. So as we sit here today, we are currently debt free. And again, very, very strong position to be in. What does that all mean, on on what should we be spending our time and focus on right now? What that means is that we've got to extract and grow value from our existing assets. We have two good quality jurisdictions with assets that have catalysts, and we need to explore how we extract further growth from those.

5:04 We'll come on to that in a bit more detail, but in summary, we're we're progressing license extensions in Vietnam to unlock an appraisal program, and we are discussing a consolidation proposal in Egypt to provide further confidence for reinvesting, into Egypt, particularly as that macro picture improved, as I mentioned, with the receivables. We do have financial flexibility because of the robust balance sheet, and that provides strategic optionality for us to be able to consider anything that can offer shareholders the maximum returns within a very strict capital allocation. And I think what I've been doing working with the team over the last couple of months is making sure that we can present and articulate a very clear and disciplined capital allocation policy.

5:52 And Sue will pick up on that in a little bit more detail later on about what that looks like for this year. Moving on to the next slide. This just highlights our first half results. I think very tried to capture the the key points here, strong revenue and strong cash balance at the end of the period, end of June. And that, as I say, has allowed us to become debt free, largely thanks to that receivables situation significantly improving, with more than 20,000,000, received to date this year. And as I mentioned, that has allowed us to declare our intention, of an interim dividend of 0.36p per share, which is an increase of 10% and an annual yield of about 7% coupled with the ongoing buyback program, which, you know, is healthy yield for a business our size our size.

6:46 I mentioned our two jurisdictions. I think what's really important for us as we look forward is that we have activity again. You know, we're at a point where we can start to look at drilling and creating value by actually monetizing the the way we we can use our assets. And and Moe will come on to this in more detail very shortly about this drilling that's underway and what that means to us going forward. As I mentioned, I think the leadership changes I've touched on, so we sit here today as a refreshed management team, enthused and looking forward to to moving forward. Minh An will talk a little bit more at the the towards the end of the presentation about our sustainability policy.

7:34 Really, for me, it's been very refreshing to see an authentic and genuine approach to sustainability for for a business of our size, and our commitment towards that net zero put in a very fit the purpose, framework. So I've I've been really, delighted to see that, and we'll we'll continue on with that moving forward.

7:59 Thanks, Manan. This, is just an overview of of where we are. I mentioned our two jurisdictions, but, again, what's really critical, the takeaway here is that these are assets with catalysts. And so we have a very clear pathway of how we think we can extract further grades from these assets. In Vietnam, we're really focused on those license extensions. Again, for the first time, we'd like to talk a little bit more about what those license extensions actually mean, and Moe will will tell you a little bit more about that. Blocks one two five and one two six are are very exciting exploration. Again, you might have heard about this previously, but we've taken a refreshed and renewed look at that and have actually made a commitment in August, just last month to proceed with ordering long lead items.

8:53 They're long lead in nature, so they are expected to be delivered next year. And that allows us some confidence that that we're moving forward with that potential. In Egypt, we've mentioned the macro environment. Moe will also talk a little bit more about our consolidation project, which seeks to the fiscal terms and ensure that we continue regular payments to provide confidence and a framework in which we can reinvest back into Egypt. And and that might be a nice moment to to hand over to Moe, to talk to you a little bit more about some of these initiatives. Thank you, Catherine. We start with Vietnam because it's a core cash flow assets for us, high netback, low breakevens, and premium to print with very stable production as you can see in the two charts in the middle. The top dark green chart shows the production from TGT, which you can see flat line and really good job overcoming the natural field decline.

10:00 This has been done through a series of low cost well intervention activities. We have no drilled in TGT in 2023. We did no drill in first in in the first half of twenty twenty four, but now we're back to drilling. And in the next slide, I'll show you a bit more about the drilling. CNV is the same way. You can see pretty strong production in CNV field. That is still highly influenced by the lateral successful lateral we drilled in February 2023. And based on that lateral success, a new RFDP revised full field development plan has put in place capitalizing on the learning from the laterals and recommending additional infill drilling to come in the near future in SINV.

10:49 I'm sitting here today confident that we will deliver within the guidance range, We have delivered on the guidance year on year in the last few years have been involved. And in the next slide so that's an important slide, because for the first time, we are able to talk to you a bit more about what the license extensions in both TGT and CNV mean to us, and there is a dedicated slide for TGT and CNV to come in next. But in TGT, the five years license extension will take us to 2031, and in CNV will be 2032, and that's sustaining the healthy cash flow that comes in from those assets.

11:32 On the right, you'll see the location of the well we're currently drilling. We finished drilling the actual phase of it. The drilling is done. Now it's moving into completions, and it will soon be put on production. The well came on time, on budget, so we're happy with the results of the first of the two in file program NTG two. Can't leave that slide without highlighting the significant exploration opportunity in blocks one twenty five, one twenty six. As Catherine mentioned, we have ordered the long lead items, which basically help us with preserving that option to drill next year. To be able to drill next year, two things has to go hand in hand. One is finding the former partners, so we'll continue those discussions with the potential interested parties.

12:21 And, also, we need to secure a well slot on the rig next year to drill l one twenty five. So we're in discussion with the rig contractor. So those are two things that's going hand in hand required to enable the drilling next year, but we're preparing our getting ready with the long lead items, which keeps that option available. Next slide, please. Okay. So exciting slide for me. This time, we're going to be talking to purely on the technical because we believe that we have had the final discussions with our partners and PVN, and all have been submitted. It's in progression waiting approval. Reminding people that we have applied for those license extensions very early, so the license won't expire until end of twenty six and end of twenty seven for TGT and CNV.

13:14 The important thing is why we applied early, that's probably why you've heard about it several times before, is we use the time to actually create and materialize a program that would be good ready after we get the approval on the extensions. So what's our commitment on the technical side? So we have a small amount for three d seismic reprocessing and a one well appraisal firm appraisal option firm firm appraisal well and then an optional appraisal. The map in the middle shows you the location of the two wells that we currently drilling in green. So H 5 Infill, this is the well we just finished. H 5000 is the next infill to come. And and with that, the appraisal program that follows, which would be the H 5 Southwest and then the H 5 West.

14:05 Assuming success on the appraisal program, there is a clear development program to go after and a clear pathway to how we bring it to production. On the left, you can see the timing, the estimated rough timing around when we move between the different stages, but I remind people that still appraisal exploration in nature, we're doing the three d processing, but we use that time to materialize the program with the five years license extension that could open up additional infill drilling beyond these two appraisal well under development locations. So really, really exciting project to see next, and, obviously, it comes in with commercial terms and and bonus, but that will come later after those discussions are finalized.

14:52 So in a nutshell, that's what we're trying to do with TGT, which is really exciting time for us. The next slide would talk about CNV, exactly the same in nature. Our commitment is a small amount for seismic reprocessing. One appraisal well, it's multilateral. So the first lateral is firm. The second lateral is option. And the interesting thing about CNV is early in the field life, we drilled in the Block B, but we drilled parallel to the fault structure. So it's proven hydrocarbon, but the well did not flow. So with the learning over the years, the lateral is designed to be perpendicular to the fractures, and, basically, we will drill and try to connect as many of those fractures as we can and hopefully make a production well out of it. Assuming success on that appraisal program, there is a defined development program to go after with defined way of bringing it on production.

15:53 So, again, a really exciting time for those. Similar story, sustaining the cash flow with the license extensions, additional development, additional value in moving a small amount from two c to two p initially because of timing, but potentially more to come in if the present programs are successful in the two assets. So moving on to Egypt. So Egypt is a low operating cost environment, and Catherine mentioned the 20,000,000 receivable. And I can say we're sitting here today. If we look back at our receivable position at the year end 2023, we have been we have been paid more than 55% of those outstanding receivable.

16:41 My last slide in Egypt will include a bit more around the receivable and what are we doing with the improved and the macroeconomic situations in Egypt. On the operation side, however, you can see flat production in the first half of twenty twenty four. It was still the same flat production in 2023. So with the modest amount of activities, we're able to keep the production line flat. Thanks to low cost well interventions and water flood. You can see the water flood kicking in and some increase small increase towards June going forward that's coming in from the water flood. The light green color on top basically shows the production coming in from the well we put in North Benz Wave late last year, and it's very stable, which is a good sign to the connected volume that well is accessing.

17:34 In 2024, development in North Venice Wave was the key. The development have been shifted, and it's partially related to the seismic, which I'm gonna tell you a bit more about it in the next slide. Okay. Go the next slide, please. Continue with the North Valley Swift theme. You can see the map, in the bottom. I've, talked about the activity shifting, and and mainly it shifted because when we were going through the seismic, processing, we have noticed that the velocity changes in the model. And, basically, what's going on through history, the ancestral Nile changes location. And when changes location, the location it was left on gets filled by material different than the original deposition, and that will impact the velocity modeling.

18:27 The velocity modeling is very important to increase the chance of success of the drilling going forward. So we allow the processing to take longer because we want to get it right instead of getting it quickly. So that's basically meant the activity that was planned for 2024 will be shifted, but the capital we have, we will redeploy the capital. The capital will be redeployed. Two wells will be redeployed to the exploration. So the first of the two exploration wells is the one we currently drilling. It's on the map on the top, the East Side exploration well. It sits between two existing producing fields, and it's a low risk, low cost exploration prospect.

19:14 And we are going through the well right now, and the results from the well are encouraging. The second of the those two exploration commitment wells will come in towards the end of twenty twenty four or early in 2025. And then there will be a development well in that will come right after the current exploration well, And the last well in the program will be a potential acceleration of an injector in North Venice Wave to support the current existing producers. So that's how the capital is deployed. So in sea in in in Egypt, in Nefa Yuma, North Benisweev, activities are heavy towards the second half of the year exactly the same way in Vietnam where the TGT was drilling in the second half of the year.

20:03 So operation heavy in the second half and also capital intensive in the second half. So that's conclusion on the operations. The next slide is the last slide on Egypt, and it's a really important slide. And I have talked in the past about my experience with the receivable position in Egypt. And I said in the past, Egypt have never defaulted, and and now we see the payments coming through. This is my third cycle. So in my twenty years career, I've seen this buildup and and paying receivable three times. So we know Egypt does pay. And it's linked to the amount of foreign exchange reserve available in country. And with the recent injection, you can see the receivable are coming down. So from the time we took over as operator in PHAROS to today, we're roughly at the same receivable balance. However, we have received a lot of money during the period, and we continue to receive money. And today, we set with 55% receivable paid from the year end. Okay. So what are we trying to do?

21:12 So we've we've met with the minister of petroleum in Egypt one on one. We've met with the EGPC regulator one on one, as Catherine mentioned. They both are encouraging investment. The government is saying the right signals. We want accelerate approvals for the benefits of accelerating investments. The government publicly committed to paying the foreign contractors. It's also one of the IMF mandates. So what we've done during those meetings with our partners, IPR, we have put forward a win win economic model for the government that will encourage us to reinvest in the assets. So the government is familiar with the consolidation projects.

21:57 There are several of them have happened, the most recent one with Apache, and there are several, like ourselves, already going through that process now with the government. We and our partners have experience with those

22:10 projects, so we have our most recent experience in PHAROS was the third amendment to the concession agreement, which shows our contractor take increased by 10 by roughly 10%. So this is very interesting project. The the the approvals of those projects tend to take time. We know from the government they want to accelerate the approval process, but they they do go through parliament approval because, technically, it's a change in the law. So we're working with the government to get this through and in the background preparing the programs that goes after that program is being approved. So that's concluding that that slide. The last thing I'm gonna say in here, why it's really important? Because it will increase the tenure of, improve the fiscal terms of MBS.

23:01 There are incentive for the re the unconventional developments. Government is going after and support it, and there are several other incentives in there that won't be able to talk much about it because it's a live discussion, but it's an important project for us. And and that concludes the operations section, and I now pass it over to Sue. Thanks. Thanks, Smith. So in terms of the results, so strong financial results for the for the interims. If we look at to to the left hand side, the our pathway, if you like, our journey from net debt net debt to net cash. So at the half year, we finished in a net cash position of 17.5.

23:47 And indeed, as Catherine mentioned earlier, we as we sit here today, we are now debt free having paid both the RBL and National Bank of Egypt. So, you know, it's a brilliant position to be in. And clearly, that's been supported by those recovery of the Egyptian receivables. So over 20,000,000 in the period to date. And you've got a chart there on the right hand side showing the trajectory, which is done. So, you know, as as we sit here just into September, you you've got still about just under 30,000,000 sitting there waiting to be recovered. And, of course, if you add that to our cash balance, then, you know, very healthy position as we move forward.

24:33 With that, if I could move to the next slide, please. Yeah. So strong cash flow from operations. So it's under 52,000,000. Of course, we have to pay the government, and indeed, we've got some working capital funding there. So operating cash flow, 28,000,000, great position to be in. We've got a moderate capital expenditure for the first half, which Moe mentioned. You know, we've been capsule intensive light in the first half, and and we'll move into a a stronger capital position in the second half. So second half, we had two wells that we're drilling on TGT and indeed a program of work in Egypt. So just under GBP 7,000,000 for the first half, but that will intensify as we move forward.

25:24 Also worth noting there is the 8.2 towards the end. That's to do with our carry and contingent consideration from our partner in Egypt. So that's all part of the deal that we did a couple of years back. The carrier is now finished, but the contingent consideration will continue for a couple of years. So we there's still money to look forward to in the pot from there. So on the strap line there, 21%

25:54 operating free cash fund yield. So great position to be in. If I could move to the next slide. So a little bit of data we haven't perhaps shown you in this format before, but just to demonstrate, you know, where the cash is coming from and where it's been spent. So free cash flow from Vietnam, 20,000,000. Egypt, just under 13,000,000. Again, I draw your attention to the 8.2 as some of that, as we know, relates to carry, so won't be a feature going forward. But again, you know, still a strong position from both the assets there. In terms of the the last block, so financing activities, so 31,000,000, obviously, very pleased to say debt free.

26:41 And those, you know, those monies as we go forward comes back into the capital allocation apart, which will be really important as we move forward in '25 and beyond. And if I could move to the next slide. So sustaining shareholder dividends, as you know, it's within our DNA, the dividend. So naught point three six three interim dividend that we're announcing. So 10% increase on prior year and indeed a 7% yield if you if you join that with the share buyback program that's been on the game. So good position position there and consumer. And then I'll move to my last slide just to talk about the '24 capital allocation.

27:30 So 74,000,000 there, debt repayment of over 50% of that. So that 39 percent million that we started at the beginning of the year has now gone. So clearly, that's that's great as we move forward. Shareholder returns of 9,000,000 and indeed investment in our capital program of work in both Vietnam and Egypt for this year. So lots to look forward to. Vietnam, low breakevens and high premiums to Brent. Those license extensions, you know, hopefully coming through soon. And indeed, one two five, we've committed to those long lead items, which is important in securing a drilling program going forward.

28:16 In Egypt, obviously, we look forward to continuing to get those receivables in and adding to our cash profile.

28:23 There's still a contingent consideration that we talked about to come for the next couple of years. And indeed, as Moe has talked about the consolidation project there, you know, lots to look forward to. So I think we we leave the the half year in a really good shape and lots to look forward to. And with that, I'll hand over to my colleague for now. Thank you, Sue. So in the first half of twenty twenty four, we continue to achieve strong results in our corporate responsibility framework. Our people is our biggest asset, and we benefit from the diverse perspective and experience that they bring. We're proud to have 11 different nationalities across all of our assets and a board with an equal gender split. We ensure the health and safety of our employees remain our top priority.

29:10 And in the first half of twenty twenty four, we're glad to report zero lost time injuries in both Vietnam and Egypt. We also continue to invest in social projects and development of industry talents across our assets, ensuring we have a positive impact to the local communities wherever we operate. And on the environment side, we're happy to report an 11% decrease in total emissions compared to the same time last year, which is keeping us on track towards our net zero by 2050 commitment. Combining this achievement with our 18% reduction at year end 2023 compared to 2021 baseline, we are on course to meet our first interim target, a 5% reduction by 2026. This is thanks to proactive management from the operations team to reduce gas flaring and fuel consumption.

30:02 Most notably, in Egypt, we continued the usage of generators that utilizes excess gas that otherwise would have been flared to generate electricity to power field operations. In Vietnam, we utilized the usage of LED lightings on the FPSO and wellhead platforms in order to reduce reliance on carbon intensive energy sources. As we look forward, we will continue to focus on reducing gas flaring and venting, enhancing measurement of GHE emissions data, and we'll look to deploy funding from the emissions management fund towards decarbonization projects that can help us meet our net zero twenty fifty climate goal. I will now hand it back to Katherine for her closing remarks. Minam, thank you. And my thanks to to Mo, Sue, and Minam today for for supporting me in this presentation.

30:53 I'd just like to spend a a few moments to wrap up before we invite questions. I think it's very clear, hopefully, with this set of results that there's strong operation delivery and that financial strength, is only going to be improved, as we look forward because of the deleveraging position. And I think that's really testament to the quality of the assets and what they've been able to deliver, historically and how we can maximize that going forward. Having said this, we are going to be very disciplined about capital allocation.

31:28 We do have near term priorities, which we've talked about in terms of unlocking that value in both Vietnam and Egypt. But we propose to be transparent, disciplined, and clear about that capital allocation, with an a focus all the time on maximizing shareholder returns That has to be our number one priority. We do have this exploration upside throughout the portfolio. The material exploration upside on block one two five, we still feel very committed to. And I

32:00 think, hopefully, we've demonstrated that by those long lead items that that we've pressed the the button on in in August. So where do we go from here? We are looking to the future. We need to grow value from our existing asset base. They are good quality assets that now is the right time to reinvest within the right commercial parameters, which again, I think we've touched on during this presentation. We will do that in parallel to maintaining that sustainable dividend policy. We feel strongly about tangible returns to shareholders for their support and commitment to the business, and we have a clear policy of no less than 10 of operating cash flow, as you know, and that will be maintained.

32:48 The share buyback program continues in its current phase, and we will look, to 2025 capital allocation and see how that fits in, for next year's, capital allocation. So we are in a position of strength as we sit here today. We are focused on near term growth delivery, and we will ensure that capital is allocated for the highest return for shareholders

33:16 and be very clear and transparent about that. It's very encouraging for me, just after a couple of months, to see such a transformed business, over the last few years and actually a real foundation to move forward. We look forward to actually being able to give you updates as we move forward on some of these near term catalysts we've talked about. So I'd like to thank you all again for taking the time in your busy schedules to listen today for the continued support from existing shareholders.

33:46 And we obviously are very open to any questions you may have. That's great. Thank you, Catherine, and to the rest of the team for your presentation. Ladies and gentlemen, please do continue to submit your questions using the Q and A tab situated on the top right corner of your screen. While the company take a few moments to read those questions submitted today, I would like to remind you that a recording of this presentation along with a copy of the slides and the published Q and A can be accessed via your investor dashboard. As you can see, we have received a number of questions for today's presentation. And, Milan, if I may now hand back

34:18 to you to chair the q and a and kindly ask you to read out the questions where appropriate to do so, and I'll pick up from you at the end. Thank you. Fantastic. Thank you. We have received a couple of similar questions, so I've grouped them together where possible. So first, turning to block one two five, we have been asked, when will it happen? Will it ever happen? And how many more years?

34:42 I Yes. Thank you, Yeah. So I think the question around the guidance One two five. Five. Yes. So 125, we have been materializing that opportunity. We have showed the seismic in 2020, seismic processing 2021 interpretation, so we have, those big prospects. We have went out and reverted this by third party with the CPR from

35:13 ERC that we published last July. So we got the confirmation. We sitting on with some really good prospects where it caused prospects to go after. Yes. We did talk to you about it early. And and, again, it's like everything. We're transparent with our shareholders. We you are part of that story. So where we are today, we've ordered the long lead items. We have been trying to drill this well, and it's obviously difficult to secure a one well slot in a deep water rig. Definitely, it was difficult for

35:43 us last year. It's just been proven difficult so far. But once we get that drilling slot and the farming partners, we would be able to progress one twenty five. Oil is in the ground. It's not going anywhere. It's still frontier exploration, and we're working on it, and we're going after it. I think I think what's important, Mae, absolutely, just to add the the the point about ordering the long lead items not only, hopefully demonstrates having refreshed look at the opportunity, that that is absolutely an important part of our, growth creation in in the portfolio. But it also preserves that optionality, to be able to make progress next year without ordering those long lead items.

36:28 We would not be giving ourselves that optionality. So there are discussions that are ongoing that gives us the confidence to to do that. Thank you very But we can't put a a hard time frame at this point. Yeah. So much. The next question, will production guidance ever see an increase? For the last few years, guidance shows a downward trend. Okay. So okay. So let's remind ourselves. So TGT, CNV are mature assets that have done well for us in the past and mature, and we have been doing a good job managing their declines. So in terms of guidance, so there are several value catalysts where that future production will grow. One of them is the drilling. One of them is the appraisal in TGT and CMV

37:21 that basically have the potential to bring additional production coming forward. Obviously, 01/25 is one of those big production opportunity to grow. And in Egypt, the the growth would have came in from Egypt initially, and that's part of that Egyptian acquisition. Having gone through this, there were several, things including the macroeconomics that have allowed that ramp up in activity and increase in production with the consolidation project, with the improvement in the macroeconomic position in country. We want to see that payment coming through

37:55 regularly and and a successful outcome on the consolidation project. And, again, that will enhance for the three investment forward. So those are the potential places where the guidance will, in the future, grow from.

38:11 Fantastic. Thank you, Maui. The next question is for Catherine. Congratulations on your appointment as CEO of PHAROS. What do you see as your key priorities and your main objectives in your first year as CEO? Okay. Thank you, Minun, and thank you for the question.

38:29 I think it is still early days. It has been just just two and a half months. So I think medium to longer term, that is still requiring some thought, but it's quite clear where our near term priorities should be, and that is extracting as much value out of the existing assets as we can and and being in a position now financially commercially with with some of the macro environment improving to actually look at moving that forward. We've really evidenced that already by the the the drilling that is active and ongoing as we speak, which we touched on, but also those value catalysts, the license extensions in Vietnam, and the consolidation project in Egypt. And those are near term priorities that we're focused on very much on a daily basis that we believe will be the next incremental value creation for PHAROS. More medium, longer term, we will we are considering, and I think we'll be in a better position once I've had a bit longer to to articulate that.

39:38 Thank Catherine. The next question, do you still expect to receive the Vietnam license extension this year? Are these likely going to result in upward revisions to two to b to two p reserves?

39:51 We're still hopeful we get it this year. So like I said, it's going through the approval process, and, this is not in our control. You know, Vietnam is still Iraqi, and there is a progression through the approval. We believe it's in the final stages, but I can't put a time frame on it, basically. The progression of the two p to c two c, there will be sorry. Moving from two c to two p initially would be a modest progression because of timing, but then there will be additional with the appraisal success. That's great. Thank you, Thank you, Will. The next question, what's the latest in relation to recouping our receivables from the Egyptian government? Are they still as committed as they were earlier this year? Have they set out a repayment schedule?

40:39 Perhaps I can take that one. Yes. I mean, we we've seen a very strong position for this year already. So as we said, over 20,000,000 received to date. We we understand from the latest communications that we've had is that their intention is to pay bills. So from October to pay bills regularly. So whatever your month's bill is, essentially, it will be paid to time. So we should expect a smooth pattern from that, but also that we'll be looking at the the past step that you've got as well. So so I think, you know, it's a strong position. There's lots of commitment there from the minister to to do more and to to get people back on track. They also clearly want to grow production, so they're looking for people to be investing as well. But, yeah, I I I think it's we're we're in a lot stronger position than we were this time last year.

41:41 I think we'll see how that that goes certainly over the next Yep. Few months and and quarter. There's absolutely very clear alignment, I would say, between us international companies and the government. It will take time to clear the full arrears, not just for us, but for everybody. But we feel pretty confident we'll get there, and I guess we'll see how we we go over the next few months. Yeah. Fantastic. Thank you so much. The next one is a question on operations. When will waterflood in Egypt start to yield some tangible results? We continue with waterflood even during the reduced CapEx period between 2020 and 2022. This seemingly hasn't increased production or even halted production decline. When will we see tangible results?

42:30 Not sure the question is actually correct because the waterflood did of the decline. This year, you can look at the production, pretty flat line. You can look at last year. It's, again, pretty flat line. What the waterflood did and would, number one, is over like, support the decline, so minimize the under field decline. And then there is a potential growth in the production from the existing wells that's more of this that comes in with the continuous production. So some of that oil banks moving towards that. But what it's doing more importantly is setting up and bringing the reservoir energy. So when we drill in the future, we drill in the locations where we have the water floods, of course. So those are location The initial rate from the future wells will be improved as a result of those water flood. But I've mentioned in this presentation, you can see some increase in from June that was related to the water flood.

43:27 We have implemented three projects so far. There's two more to come before the year end and several more to come. It's a it's a it's an ongoing optimization. And and and the way we're investing around the water flood is by optimizing that investing, meaning we go and convert one of the existing wells to injector, and then we drill around it. So there is a mechanism in the background. I would say the waterflood so far is working as designed. Fantastic. Thank you, Moe. I will now move on to the live questions. Could we have more color on the consolidation project? When you kick it off, for how long? Okay. So Let me just check that one.

44:13 Yeah. Of course. Yeah. Yeah. Yeah. We kicked it off in May, of twenty twenty four. That's, when we submitted our proposal joint proposal between us and our partners, the IPR, to the government. During that period, there was change in the cabinet in Egypt. We received the initial feedback two months later, and and, basically, that discussion's on is ongoing at the moment live. For how long? It's difficult to have a specific time. I know the last concession agreement took us roughly a year to eighteen months, but that was the previous system. We know from the government that they're trying to accelerate approval, and it's evident by the continuous meetings and conversations we have with the government.

45:02 So we're looking, to accelerate and working closely with our partners in time to go through that, conservation project conclusion. And if you reflect back on the government position today, every barrel of oil we produce more is a one barrel less being imported, and that money will be freed up to pay receivable. So the minister have said very clearly the government is interested in the new investments coming in, and they understand that the conservation project will lock unlock some of those investments coming in. So they're keen to progress approvals. Great. That's very helpful. Thank you, Mo. The next question, does future guidance exclude contribution from new wells mentioned today?

45:50 Future guidance. So we will look at 2025 guidance. We haven't put our future guidance. Right? No. And I think I think given the activity in the second half, I think Sue mentioned as well, we're more capital intensive heavy the second half, and and and let's see where we get to with the the wells that we're drilling because that that will have some consideration into our production guidance for next year, which we haven't set yet. It will help for sure the exit rate. So that's where the two will set the second half will will be material. It will help the exit rate when they get put on production. But it's, again, it's in a role that's sustaining the production level we have. Yeah.

46:40 Yeah. Thank you. We did have another question from Mohammed, and I'm sorry if I'm misunderstanding your question. Do think an increase in production will take less than a year? Increase in production? I think it relates to the consolidation. Consolidation. Would like to think it well, but because it's not purely in our control, I can't tell you for sure it will take less than a year. But I'm hearing from the government, especially on those one on one conversations. They're very keen. And and and just to give you some color, when we met with the minister, we had a meeting with the HPC chairman. And after that, there was a follow-up by the minister office that they're actively engaged that that tells me it's it's it's didn't done the process we've gone through before. But because it's in the government control, because it has to go through parliament approval, won't be able today, we just kicked it off in May. So it's early time to tell you whether it's a year or less or more, but it's within the time we're working on.

48:01 As there are no further live questions, I will now hand it back to Alex. Perfect. That's great, Manan. And to the rest of the team, thank you for addressing all those questions from investors today. And of course, the company can review all questions submitted today, and we will polish those responses on the investment company platform. But before redirecting investors to provide you with their feedback, which I know is particularly important to the company, Catherine, can I please ask you for a few closing comments? Thank you. Just to say thank you again for everybody's time and attention to listen to our presentation today. We feel very confident about the future given the financial foundation and the operating outlook for us. So thank you for those that are are continuing to support us, and we look forward to speaking to you again soon. Thanks again for your time.

48:50 That's great. Thank you once again, Catherine Kath Catherine, Moe, Sue, and Monand for enter the rest for your presentation this afternoon. Could I please ask investors not to close this session as we will now be automatically redirected to provide you feedback and also that the board can better understand your views and expectations? This will only take a few moments to complete, and I'm sure we'll 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, and good afternoon to you all. Thank you very much. Thank you. Thank you.