IPR Lake Qarun Petroleum has agreed to acquire operatorship stake in the two onshore concessions in Egypt from Pharos Energy for approximately $115m.
Under the conditional agreements, IPR Lake Qarun Petroleum will acquire a 55% stake in the El Fayum and North Beni Suef concessions by making a payment of $5m at closing.
The firm will also fund Pharos’ costs for $38.43m.
Additionally, the transactions include up to $20m in contingent consideration, which is based on Brent crude prices for the years 2022-25.
Pharos CEO Ed Story said: “The farm-out, while instantly boosting our balance sheet, will allow the entry of a partner who has committed to carry Pharos on a capital programme on these Egyptian assets, which will, in turn, lead to increased production, helping to fulfil the full potential of the concessions.”
Pharos Group said that the farm out of the concessions is part of its strategy to strengthens its balance sheet.
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The deals are planned for completion in the first quarter of 2022.
In a statement, Pharos said: “IPR is well capitalised to fund the proposed work programme on both concessions and its existing in-country presence and relationships with the Egyptian Government and regulatory authorities are expected to facilitate a rapid expansion of operational activity following completion.”
In the first half of 2021, Pharos reported production in Egypt at 3,718 barrels per day (bpd), down from 5,979bpd in the same period of 2020.
The firm expects the production in the country to stand at 3,200bpd-3,500bpd in the second half of this year.
In October, Pharos plans to launch a three-well programme with an aim to boost production with longer-term plan involving 57 or 90 well producer and injector programme, driven by funding from IPR.
IPR Lake Qarun Petroleum is a wholly owned subsidiary of petroleum company IPR Energy.