More oil investment from Transglobe + Pharos
Transglobe, Pharos Energy sign USD 506 mn oil E&P agreements: The Oil Ministry signed oil exploration and production agreements with Canada’s Transglobe and London-based Pharos Energy that will see them spend a combined minimum of USD 506 mn, in addition to a USD 67 mn signing bonus, according to a ministry statement on Thursday. The two companies will drill a total of 12 new wells under the agreements, the statement says.
The agreements include a 3.5-year extension to Pharos Energy’s exploration license in the El Fayum concession in the Western Desert, according to a company statement. The extension agreement includes “an additional obligation on [the] contractor to drill two exploration wells and acquire a 3D seismic survey in the northern area of the license.”
What’s in it for each side: The extension agreement will raise the London-based company’s cost recovery percentage, allowing it to use 40% of gross revenues from all its current and future Egyptian concessions to recover costs, up from 30% previously. At the same time, Pharos will “waive its rights to recover a portion of the past costs pool (USD 115 mn).” The company will also cut its excess cost recovery petroleum share in half to 7.5%.
Refresher: The signing of the agreement was a key precondition for Pharos’ planned sale of a 55% working interest in each of its El Fayum and North Beni Suef concessions to IPR Energy Group subsidiary IPR Lake Qarun. The c. USD 63.4 mn transaction is expected to be completed during 1Q2022, Pharos said when it announced the agreement last year.
Transglobe, meanwhile, signed a new agreement that will consolidate its three existing concession agreements in the Eastern Desert (West Gharib, West Bakr, and North West Gharib), according to the ministry.
The agreement will see the Canadian firm spend some USD 200 mn here over the next fifteen years, according to a company statement. The amount includes a minimum USD 50 mn the company committed to spending “over each five-year period for the 15 years of the primary term,” as well as an annual USD 10 mn payment each year for the next five years.