Pharos Energy has reached a farmout agreement that will see it sell majority stakes in its two Egyptian oil concessions as it looks to repair its balance sheet following a tough year through covid. The energy company will sell a 55% working interest in each of its El Fayum and North Beni Suef concessions to IPR Energy Group subsidiary IPR Lake Qarun for up to USD 63.4 mn, it said in a statement (pdf) yesterday. The agreement, which values the assets up to USD 115 mn, should be completed during 1Q2022, according to the statement.

2020 was tough for Pharos: The combination of the pandemic and the oil crash took their toll on the London-based company, which reported a USD 216 mn loss (pdf) last year. In response, Pharos was forced to make salary cutbacks, suspend dividends, and start the process to farm out its Egypt assets last year.

What Pharos is getting from the agreement: Pharos will receive USD 5 mn when the transaction is completed and USD 38.4 mn to fund future costs associated with its remaining shares in the concessions. Another USD 20 mn will be paid depending on Brent prices between 2022 and 2025, the statement said.

What they said: The move will “instantly boost” the company’s balance sheet, and by bringing in a new partner will result in increased production, CEO Ed Story said.

Advisors: Financial services company Jefferies is acting as financial adviser and sponsor to Pharos on the transaction.

Earlier this year, Pharos Energy announced an oil discovery with potential of 4.3 mn barrels in its Abu Rawash Lower “G” reservoir, and a smaller 430k barrel deposit in its Upper Bahariya reservoir, which is part of its El Fayum concession.