Recommended acquisition of Pharos Energy plc by Serica Energy plc

To be effected by means of a scheme of arrangement under Part 26 of the Companies Act 2006

The board of directors of each of Serica and Pharos are pleased to announce that they have reached agreement on the terms of a recommended offer pursuant to which Serica will acquire the entire issued and to be issued ordinary share capital of Pharos (the “Acquisition”). The Acquisition is intended to be effected by means of a scheme of arrangement under Part 26 of the Companies Act.

Accordingly, the Pharos Board has decided unanimously to withdraw its recommendation of the Ratio Offer and intends to recommend unanimously the Acquisition to Pharos Shareholders. The Pharos Board therefore proposes to adjourn until further notice the Ratio Offer Shareholder Meetings which have been convened for 17 August 2026 for the purposes of considering the Ratio Offer. Pharos Shareholders are therefore urged to take no action in relation to the Ratio Offer.

Katherine Roe, Pharos’ CEO, stated:

“As announced in our recent trading update, the business is benefitting from strong operational momentum. At the same time, the Board of Pharos is delighted to be recommending this offer from Serica, which delivers shareholders a material premium in cash to the Ratio Offer.”

Chris Cox, Serica’s CEO, stated:

“The acquisition of Pharos is a compelling opportunity to deliver a first step in our long-standing strategic objective of adding to the diversification of our business through international expansion, on terms that are accretive on a per share basis across all key metrics, with multiple embedded growth options. Upon completion the transaction will boost our reserves, resources and add materially cash-generative production, while at the same time delivering an attractive liquidity route for Pharos shareholders.

 Pharos brings a highly experienced regional team and an operating model that mirrors our own focus on cash generation funding both growth and returns. As we continue to invest in the UK North Sea, with a multi-well rapid return drilling programme set to begin in 2027, this presents a complementary platform from which to grow in South East Asia, a region with increasing energy demand that benefits from a supportive environment for upstream investment. With a robust balance sheet and material ongoing cash generation, we continue to analyse multiple opportunities to deliver further M&A and create significant value for shareholders.”

Summary

Under the terms of the Acquisition, and subject to the Conditions and further terms set out in Appendix I to this announcement, Pharos Shareholders will be entitled to receive:

• • 28.6683 pence in cash per Pharos Share (the “Cash Consideration”); plus
  • 4.0 pence in cash per Pharos Share by way of special dividend to be paid from Pharos’ existing cash resources that the Pharos Board intends to declare prior to completion of the Acquisition with the record and payment dates aligned with the corresponding dates for determining entitlements to, and payment of, the Cash Consideration due to Pharos Shareholders under the terms of the Acquisition (the “Special Dividend”),

which would result in a total value to Pharos Shareholders of 32.6683 pence per Pharos Share. Pharos Shareholders, where they qualified, will continue to be entitled to retain the final dividend of 0.9317 pence in cash per Pharos Share for the financial year ended 31 December 2025 which was declared on 25 March 2026 and paid on 17 July 2026 to qualifying Pharos Shareholders on the register at close of business on 12 June 2026 (the “FY25 Final Dividend”).

Taking together the total value offered of 32.6683 pence per Pharos Share with the FY25 Final Dividend, the aggregate amount Pharos Shareholders will receive is 33.6 pence per Pharos Share.

The aggregate value of the Cash Consideration and the Special Dividend, 32.6683 pence per Pharos Share, values the entire issued and to be issued ordinary share capital of Pharos at approximately £145.7 million and represents:

• • a premium of 20.7 per cent. to the equivalent 27.0683 pence per Pharos Share being the aggregate of the cash consideration and special dividend (the “Ratio Cash and Special Dividend Consideration”) announced in the Ratio Offer; and
  • a premium of 28.6 per cent. to the undisturbed Closing Price of 25.4 pence per Pharos Share on 23 June 2026 (being the last Business Day prior to the Ratio Offer).

The total value offered of 32.6683 pence per Pharos Share together with the FY25 Final Dividend represents an increase of 20.0 per cent. compared to 28 pence per Pharos Share being the total value of Ratio’s offer for Pharos (the “Ratio Total Offer Value”) as announced in the Ratio offer.

If, on or after the date of this announcement and on or prior to the Effective Date, any dividend, distribution or other return of value is declared, made, or paid, or becomes payable by Pharos (other than the FY25 Final Dividend and the Special Dividend), Serica reserves the right to reduce the consideration under the terms of the Acquisition by the amount of such dividend, distribution or other return of value in which case any reference to consideration payable under the terms of the Acquisition will be deemed to be a reference to the consideration as so reduced. In such circumstances, Pharos Shareholders shall be entitled to retain any such dividend, distribution, or other return of value declared, made, or paid.

Shareholder support

Serica has received an irrevocable undertaking to vote in favour of the Scheme at the Court Meeting and the resolutions to be proposed at the General Meeting from Aberforth Partners LLP in respect of a total of 59,357,027 Pharos Shares representing, in aggregate, approximately 14.26 per cent. of Pharos Shares at the Latest Practicable Date.

Further details of this irrevocable undertaking are set out in Appendix III to this announcement.

As a result of this announcement, the irrevocable undertakings given by certain Pharos Shareholders in respect of the Ratio Offer (the “Ratio Offer Irrevocable Undertakings”) will lapse in accordance with their terms unless Ratio exercises its right to match the value of the consideration offered by Serica pursuant to the Acquisition within 10 Business Days (in the case of the Ratio Offer Irrevocable Undertakings from Bradley L. Radoff and the Radoff Family Foundation) or 15 Business Days (in the case of the Ratio Offer Irrevocable Undertakings from Blue Albacore Business Ltd, Liquid Business Ltd, Palamos Limited, Josephine V. Story, The Edward T. Story Marital Trust Dtd 12.27.2023 and The Story Family Trust Dtd 5.9.2011) from the date of this announcement and in accordance with the terms of the relevant irrevocable undertakings.

Strategic rationale for the Acquisition

The Acquisition is consistent with Serica’s long-standing strategic objective of increasing its scale and diversification by adding overseas operations with a focus on regions which benefit from a supportive regional environment for upstream investment and increasing energy demand as well as running room for further growth. The Acquisition establishes an operating platform in two new regions at a value accretive cost, and brings multiple embedded growth options – infill drilling at TGT and CNV, development drilling in Egypt on recently implemented improved fiscal terms, and the high-impact exploration acreage at Blocks 125 & 126.

Pharos has been pursuing an analogous business model, with cash-generative production funding shareholder returns and growth, and brings a highly experienced regional team which complements Serica’s position as one of the leading independents on the UK Continental Shelf.

The Combined Group brings together the complementary operating skills of Serica and Pharos, applying Serica’s proven subsurface capability to Pharos’ mature producing assets, alongside Pharos’ established in-country organisations and host-government relationships in Vietnam and Egypt as support to Serica’s further growth optionality.

Specifically:

• • Serica believes that the Acquisition offers Pharos Shareholders a materially higher degree of certainty that completion will be achieved than under the Ratio Offer, given Serica’s established record of obtaining the regulatory, licensing and government consents required to complete corporate and asset acquisitions;
  • the Acquisition is expected to be immediately accretive on a per share basis to Serica’s production, reserves and key financial metrics from operations;
  • the Combined Group will benefit from increased scale and diversification:

• 13% increase in pro forma 2P reserves to 156.8 mmboe;
• 15% increase in pro forma 2C resources to 129.4 mmboe; and
• expected pro forma 2026 exit production rate of c.70,000 boepd;

• • the Acquisition adds established, cash-generative production in Vietnam and Egypt, and a debt-free balance sheet with approximately $45 million of cash as at 30 June 2026;
  • the Combined Group would benefit from a robust balance sheet, with material liquidity, with the capacity to optimise the delivery of infill opportunities in Vietnam and Egypt, while continuing to seek a farm out partner for a high-impact drill-ready prospect in Block 125 & 126, Vietnam and elimination of overlapping corporate overhead costs; and
  • the Acquisition reflects Serica’s disciplined approach to inorganic growth and represents an acquisition cost of $8.4 per 2P boe ($4.4/boe including 2C resources), for existing production with low decommissioning liabilities, comparing favourably with relevant precedent transactions.

Background to and reasons for the recommendation

• The agreed terms of the Acquisition deliver immediate and certain value in cash to Pharos Shareholders at a level which, in the unanimous view of the Pharos Directors, fairly reflects the future prospects of the business while removing the execution, commodity-price, operational, country and financing risks associated with the delivery of the standalone plan.
• In considering the Acquisition, the Pharos Directors have also assessed:

• • the fact that the total amount of 33.6 pence per Pharos Share represents an increase of 20.0 per cent. compared to the Ratio Total Offer Value;
  • the fact that the aggregate value of the Cash Consideration and the Special Dividend represents a premium of 20.7 per cent. to the Ratio Cash and Special Dividend Consideration; and
  • the certainty of the Cash Consideration, including the form, sources and nature of Serica’s financing and the limited conditionality of the Acquisition.

• Pharos believes that the Acquisition represents a more compelling and deliverable liquidity opportunity for the Pharos Shareholders, delivering immediate and certain value in cash to Pharos Shareholders at a level substantially above the Ratio Offer.

Recommendation

• The Pharos Directors, who have been so advised by Rothschild & Co as to the financial terms of the Acquisition, consider the terms of the Acquisition to be fair and reasonable. In providing its advice to Pharos Directors, Rothschild & Co has taken into account the commercial assessments of the Pharos Directors. Rothschild & Co is providing independent financial advice to the Pharos Directors for the purposes of Rule 3 of the Code.
• Accordingly, the Pharos Directors intend to recommend unanimously that Pharos Shareholders vote in favour of the Scheme at the Court Meeting and the resolutions to be proposed at the General Meeting (or, in the event that the Acquisition is implemented by way of a Takeover Offer, to accept or procure acceptance of the Takeover Offer).
• On 24 June 2026, Ratio announced that they had reached agreement on the terms of a recommended cash acquisition by Ratio of Pharos at a total value of 28 pence per Pharos Share (inclusive of the FY25 Final Dividend). The Ratio Offer stated that the Pharos Directors intended to unanimously recommend that Pharos Shareholders vote in favour of the Ratio Offer at the Ratio Shareholder Meetings.
• The Pharos Board has, together with its financial adviser, carefully considered the financial terms of the Acquisition and concluded that the Acquisition represents a superior offer for Pharos Shareholders as compared to the Ratio Offer.
• Accordingly, the Pharos Board has decided unanimously to withdraw its recommendation of the Ratio Offer and intends to recommend unanimously the Acquisition to Pharos Shareholders. The Pharos Board therefore intends to adjourn until further notice the Ratio Offer Shareholder Meetings which have been convened for 17 August 2026 for the purposes of considering the Ratio Offer. Pharos Shareholders are therefore urged to take no action in relation to the Ratio Offer.

Timetable and Conditions

It is intended that the Acquisition will be implemented by way of a scheme of arrangement between Pharos and Pharos Shareholders under Part 26 of the Companies Act (although Serica reserves the right to implement the Acquisition by way of a Takeover Offer, subject to the Panel’s consent and compliance with the Code).

The Scheme shall be conditional on, among other things, the terms and Conditions set out in Appendix I to this announcement, including:

• • the approval of the Scheme by a majority in number representing not less than 75 per cent. in value of the Scheme Shareholders who are on the register of members of Pharos at the Voting Record Time, in each case present and entitled to vote and voting, whether in person or by proxy, at the Court Meeting (or any adjournment of such meeting);
  • the resolutions required to approve and implement the Scheme being duly passed by Pharos Shareholders representing the requisite majority or majorities of votes cast at the General Meeting (or any adjournment thereof);
  • the satisfaction or waiver of the Regulatory Conditions in Vietnam and Egypt;
  • the sanction of the Scheme by the Court with or without modification (but subject to any modification being on terms acceptable to Pharos and Serica); and
  • the delivery of a copy of the Court Order to the Registrar of Companies.

Regulatory Conditions

• The Acquisition is conditional on the satisfaction or waiver of the Regulatory Conditions, which are specifically drawn to the attention of Pharos Shareholders, in Vietnam and Egypt. Serica considers the satisfaction of the Regulatory Conditions in Vietnam and Egypt to be of fundamental importance in the context of the Acquisition taking account of the particular circumstances of the Acquisition and Pharos’ operations in those jurisdictions.
• If any of the Regulatory Conditions in Vietnam and/or Egypt were not satisfied on the terms set out in those Conditions, this would fundamentally undermine the rationale behind the Acquisition and therefore, Serica does not intend to implement the Acquisition if the requisite consents, approvals, clearances or waivers, in either Vietnam or Egypt pursuant to the Regulatory Conditions are not granted or achieved on the terms set out in those Conditions.
• The Regulatory Conditions in Vietnam and Egypt have been included following specific negotiation between Serica and Pharos.
• Pharos Shareholders should note that Serica intends to seek the Panel’s consent to invoke the Regulatory Conditions in Vietnam and/or Egypt in accordance with Rule 13.5(a) of the Code if any of the circumstances described in the Regulatory Conditions materialise. A decision by the Panel whether to permit Serica to invoke a Condition would be judged by the Panel by reference to the facts at the time that the relevant circumstances arise.
• Subject to the satisfaction or (where applicable) waiver of the Conditions, the Acquisition is expected to become Effective in H1 2027. The full terms and conditions of the Scheme and an expected timetable of principal events will be included in the Scheme Document.
• The Scheme Document, containing further information about the Acquisition and the Scheme and notices of the Court Meeting and the General Meeting, will be distributed to Pharos Shareholders (along with the Forms of Proxy for use in connection with the Court Meeting and the General Meeting) as soon as reasonably practicable and within 28 days of this announcement. The Scheme Document will also be made available by Pharos on its website at https://www.pharos.energy/investors/.

This summary should be read in conjunction with the full text of this announcement. The Acquisition shall be subject to the Conditions and further terms set out in Appendix I to this announcement and to the full terms and conditions which shall be set out in the Scheme Document. Appendix II to this announcement contains the sources of information and bases of calculations of certain information contained in this announcement, Appendix III contains a summary of the irrevocable undertaking received in relation to this Acquisition and Appendix IV contains definitions of certain expressions used in this summary and in this announcement.

Serica management will host a live presentation on the Investor Meet Company platform on Monday 27 July at 0900 BST. The presentation is open to all existing and potential shareholders. Questions can be submitted at any time during the live presentation. Investors can sign up to Investor Meet Company for free and add to meet Serica Energy plc via https://www.investormeetcompany.com/serica-energy-plc/register-investor.

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