Pharos Energy to be acquired by Ratio Petroleum, based in Israel

Ratio Petroleum Energy agreed to purchase Pharos Energy for a total of PS124.3million ($164 million) in an all cash deal. This gives the Israel-based company access to production assets located in Egypt and Vietnam.

The transaction takes place amid increased commodity price volatility, linked to the U.S.-Israeli War on Iran. This has boosted energy company share prices. In this context, Pharos wanted Ratio to make a better offer that reflected its higher cash flow generation.

The agreement stipulates that Pharos? will receive up to 28 pence per share in cash.

Ratio already has the support of shareholders who represent nearly 42% Pharos' capital including board backing.

On Wednesday, shares in Ratio dropped as much as 11% to their lowest level since April. Last trading was down 5%.

REVIEW OF STRATEGIC OPTIONS

Pharos’ mature fields and small scale have limited growth prospects and capital access, prompting an evaluation of strategic options.

Pharos, under the leadership of CEO Katherine Roe has been able to secure licence extensions for?Vietnam and repaid debts.

Ratio plans to investigate the possibility of selling a part of Pharos’ interest in its Egyptian operations, to a third party partner, as well as combining?the portfolio of assets of both the company and Pharos, it stated.

The company said that there could be a reduction in the number of employees.

Ratio Petroleum has interests in three basins, located on opposite sides of the globe: Guyana, Morocco Atlantic and the East Palawan Basin, Philippines.

The company has historically focused on frontier exploration but has recently shifted its focus to?acquiring producing assets.

The deal is still'subject to shareholder approvals and regulatory clearances of Vietnam and Egypt. It should be completed in the first half 2027.

(source: Reuters)