PICO E&P is an Egyptian private oil and gas player, which holds assets in Egypt, Romania and Mexico. It is part of the family owned Pico Group that is engaged in different industry sectors (e.g. agriculture, food, energy, services, and real estate). In Egypt, PICO E&P, directly or through its affiliates, owns interests in six offshore oil and gas assets (Zaafarana, Amal, Gemsa, Geisum and Tawila West, West Tawila Marine and South Ramadan). In addition, PICO E&P owns interests in five onshore fields, formerly producing oil and gas fields in Romania, and an exploration, development and production service agreement in the Altamira area, Northern Mexico. PICO E&P and the PICO Group are private companies, owned by the Diab family, a well-known Egyptian family, which has been operating businesses in Egypt for several decades.

The Total Project Cost is estimated at c. US$250 million.
IFC proposes to provide an up to US$75 million senior loan, as part of a larger reserve based lending facility of US$250 million, in favor of Cheiron Finance Limited (the “Company”), a wholly owned subsidiary of PICO E&P. The mandated lead arrangers of the facility are HSBC, EBRD and IFC. The loan will be provided in two tranches, a commercial bank tranche of US$100million and an IFC and EBRD tranche of approximately US$150 million(final amount will depend on the revised cash flow model), shared 50/50 between the two institutions.

75.0 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	75.0
Equity

* These investment figures are indicative

The two assets supporting the investment (Zaafarana and Amal) are located offshore Gulf of Suez, in shallow waters (25 to 50 m deep). The Amal field is located in the southern province of the Gulf of Suez, approximately 55 km from the city of Ras Gharib, 15 km southwest from Morgan Oil field, and about 15 km offshore from the western shoreline. The license, covering 26.8 km2, was originally issued in 1981 and fully acquired by PICO in 1998. The Zaafarana field is located in the north central Gulf of Suez, about 6.5 km from the shoreline. The license, covering 22.0 Km2, was originally issued in 1989 and since 1993 is managed by the Zaafarana Oil Company JV, for which PICO subsidiaries own 80% of the private shares.

Through this investment, IFC will support the development and growth of a junior, family-owned oil and gas company in its core operations in Egypt. The Project will lengthen the life of and help maximize hydrocarbon production from PICO E&P''s mature fields and promote continued gas development in the Amal field. This supports the Government of Egypt (GoE)''s efforts to increase natural gas development in Egypt to meet growing local demand. Furthermore, by increasing production and extending the output horizon of the fields, the GoE will also benefit from a longer period of higher fiscal revenues. Also importantly, an investment in a locally-owned oil and gas operator, in a market dominated by international majors, will set an example for potential other indigenous players. Finally, as the company intends to grow internationally, IFC''s stamp of approval will be helpful to demonstrate sound corporate governance, E&S practices and financial soundness.

IFC has reviewed the benefits of the project and the associated governance risks and believes that the project should be supported. In coming to this view, IFC considered the magnitude of fiscal benefits, governance metrics and the World Bank’s engagement to support good governance. The oil and gas sectors in Egypt has historically been stable, and the issuing of licenses and the sharing mechanisms for revenue, taxation and royalty between private companies and the public sector can be considered relatively transparent and is likely to improve further given the government’s push to attract more foreign investments in the sector. As per IFC requirements, PICO E&P will publicly disclose all material payments made to the government of Egypt and its material contracts.

- Providing financing and contributing to restore investor confidence: Since the Arab Spring, and in the current transition phase, international lenders have been less active in financing oil and gas companies in the country. Even junior companies with good track-record and a solid production base such as PICO E&P have found it hard to secure long term financing. Development Finance Institutions have been playing an important role in providing liquidity and allowing juniors to continue to meet working capital requirements and grow.
- Environment and Social: Provide support to PICO E&P to adopt effective practices and a corporate Environmental and Social Management System to operate in line with IFC''s Performance Standards.
- Corporate governance: PICO E&P is a family-owned business but the Company is keen on upgrading its corporate governance. IFC, in collaboration with EBRD, will be able to provide valuable advice and guidance in how to enhance corporate governance.
- Long Term partnership: The company is currently operating in Mexico under service contracts, but envisages to play a more active role in the country''s oil and gas sector. By providing the corporate-level support mentioned above on E&S and corporate governance matters, IFC will be helping PICO E&P set international standards that will assist the company in its ambition to become the only private Egyptian oil and gas companies with a significant international footprint.

Indicator	Metrics	Comments	Calendar Year 2022	Calendar Year 2023	Calendar Year 2024
Payment to Government	Annual Payments ($M)		Not Available	Not Available	Not Available
Domestic Purchases ($M) and (MT)	Current Purchases ($M)		Not Available	Not Available	Not Available

This is a category B project as the impacts related to PICO E&P’s field activities are site specific, located in shallow water areas with existing oil and gas operations and adverse impacts, if any, can be mitigated through the mitigation measures identified in the project ESIA. PICO E&P and the relevant joint ventures have demonstrated an overall good EHS operational track record in the past five years.

The client is committed to implementing the IFC Performance Standards in identifying and mitigating Environmental and Social Risks related to the project activities.

Please refer to the related Environmental and Social Review Summary (ESRS) document for this project.

Please refer to the Environmental and Social Action Plan (ESAP) tab in the related Environmental and Social Review Summary (ESRS) document for this project.