annual report - pico group

PICO International Petroleum • 2011 Annual Report

Section Hed

I

International Petroleum

2 0 1 1Annual Report

PICO International Petroleum • 2011 Annual Report

Section Hed

II

2 0 1 1Annual Report

International Petroleum

2 PICO International Petroleum at a Glance

4 Strategy & Vision

5 Corporate Timeline

6 Letter from the Chairman

8 Highlights & Outlook

10 Strategy

12 Egypt’s Oil & Gas Environment

14 Global Oil & Gas Environment

18 Asset Profiles 20 Amal21 Geisum and Tawila 22 Gemsa 23 Zaafarana24 Horus (East Alamein)24 South Ramadan Marine

26 Senior Management

28 HSE & CSR

30 PICO Group

32 PICO International Petroleum Financial Statments

62 Cheiron Holdings Limited Financial Statments

PIP at a GlanceSix fields comprise PICO International Petroleum’s holdings: PIP holds operating interest in three joint venture (JV) companies, non-operating interest in one concession in the Gulf of Suez and non-operating inter-est in one field in Egypt’s Western Desert.

15,468WI Average boepd

2010-2011

USD 913 million invested since 2005

across six assets

267%Reserve Replacement

Ratio from 2004-2010

2010-2011 Revenues of

184USD million

1041Joint Venture

Employees & 69in Head Office

5.6% Production Compounded

Annual Growth Rate from 2005-2011

PICO International Petroleum presently holds working interest reserves of over 150 million barrels of oil equivalent (as of July 2011).

57.3mmboe WI Contingent Reserves

151.5mmboe WI Reserves

PIP WI Production(in mmboe)

PIP reinvests in new opportunites — including new fields with favor-able characteristics — and near field exploration with notable success.

Oil to Gas Reserves*(in mmboe)

*Excluding contingent and prospective reserves

WI Contingent Reserves(in mmboe)

WI Reserves(in mmboe)

Remaining Gross Reserves at PIP Fields(in mmboe)

Organic reserves growth based on field reassessment at all operated fields

Development and implementation of Amal field development plan

Acquisition of Geisum, Tawila and Horus fields

31.8

119.7

Oil

Gas

Corporate TimelineStrategy & Vision

Strategy & Vision Corporate TimelinePIP International Petroleum Realizing Value: Unlocking Production at Declining Fields

PICO International Petroleum (PIP) is revitalizing and optimizing pro-duction at small and medium sized mature fields, where its interests span the range of oil and gas upstream activity — from near field exploration, to full field development planning and operations.

Using technical expertise and a con-trolled cost base, PIP unlocks value at declining fields: PIP’s activities are 25.5 gross mboepd

5 gross mboepd

In just more than two decades, PICO International Petroleum (PIP), part of PICO Group, has evolved into Egypt’s largest inde-pendent exploration and production company. With its origins in 1974 when PICO Group established Egypt’s pioneering oil services company, PIP began full petroleum exploration and production activi-ties in 1989. By 1990, the company

was producing a gross 5,000 bar-rels of oil per day (mboepd) after acquiring the rights to four mature and declining fields in Egypt’s Gulf of Suez.

In 2010, PIP’s holdings had grown to six fields with gross production of 35,000 mboepd, including work-ing interest production of 18,614 mboepd.

aimed at maximizing reserves and realizing full asset recovery at each of its fields.

From its base in the robust Egyptian mature fields market, PIP is expand-ing by consolidating its position in the Gulf of Suez and seeking to apply its expertise in regional and interna-tional markets demonstrating similar dynamics.

Across all operations PIP adheres to international industry best practice HSE standards ensuring the well being of all employees, the general public and the environment.

1990

2011• Negotiated extension for Amal, Gemsa and South

Ramadan conessions. • Acquired operational control of South Ramadan.• Negotiated new gas pricing at Amal.• In Zaafrana, PICO acquired a further 25% share

from Anadarko Petroleum.

2007

• Acquired 35% of the East Alamein concession in the Western Desert from Vegas Oil and Gas.

• Awarded first producing asset, Geisum, to be tendered by the Egyptian government with an exploration and development commitment of USD 120 million over the first three years.

2004 • Move to invest in gas production, seeking opportunities across Egypt and MENA.

1999 • Purchased British Gas’ equity share in North Zaafarana Field, offshore GoS.

1998 • Bought KUFPEC’s 73.5% equity share in Amal Field, offshore GoS.

1995 • Acquired Shell’s 100% equity share in East Gemsa offshore GoS.

• Acquired Total’s rights in its Production Sharing Agreements for the Amal, Shukhier Bay, South Ramadan and Gamma fields in the GoS.

2005• Amal gas clause approved by the Egyptian

government, marking its entry into commercial gas production.

PICO International Petroleum • 2011 Annual Report PICO International Petroleum • 2011 Annual Report6 7

Letter from the ChairmanLetter from the Chairman

Letter from the Chairman

Dear Shareholders,

The January 2011 Egyptian Revolu-tion is credited with unlocking the country’s positive potential, yet there is no doubt that its immediate aftermath temporarily disrupted the day-to-day business activities of many local companies. We are happy to say that at PICO International Petroleum (PIP) we responded immediately to the en-suing events and, through our Business Continuity Plan, which was executed as the crisis was unfolding, we were able to sustain production and opera-tions throughout the tumultuous days of the revolution. It is an accomplish-ment of which we are all very proud.

In terms of operations, earlier this year, PIP managed to adjust its gas price for the Amal concession to reach USD 2.1 per million BTU. We

also reached an agreement with the Egyptian General Petroleum Cor-poration (EGPC) for the extensions of the Amal, S.E. Gemsa and South Ramadan concessions, as well as the operatorship in South Ramadan.

Although the agreement with EGPC has been ratified, its implementation is pending until the Egyptian Parlia-ment convenes after elections are over. We expect this to be completed in FY 2012-13.

As part of our general focus on the development of mature oil and gas fields, we continue to be committed to maintaining and developing our current assets. We have set a budget of USD 395 million over the next two years, which will be directed towards

drilling five development and two exploration wells, 12 work-overs, along with the required infrastructure as per plan.

We have always believed that one of PIP’s core strengths is our ability to create value by tapping potential that is beyond the reach of many other E&P operators in our market segment. Through both near field exploration activities and the application of fit-for-purpose technologies that prolong and enhance field recovery factors, we are now actively pursuing international expansion plans into regions where our core competencies of redeveloping ma-ture fields plays out. In this respect, our target is to have 25% of our reserves base coming from our international expansions by 2015.

The unfortunate events of 2010 in the Gulf of Mexico that made headlines around the world have highlighted, once again, the critical importance of the Health, Safety & Environment (HSE) issues which PIP takes to heart. Aiming “to go beyond mere compliance and towards excellence,” PIP has set for itself HSE targets well above those required by the Egyptian govern-ment, and we are proud to say that tangible efforts are being made by all our joint ventures to abide by, and to exceed, these required targets. Throughout the year, only three lost time injuries have occurred, with no physical impact or fatalities — a recognizable achievement in com-parison to both our targets and our peers.

PIP has high hopes for the coming year as we proceed with full force towards our growth plans in Egypt and beyond. As the situation in Egypt stabilizes, we look forward to reaping the full fruits of the Revolution as the country takes strides towards the po-litical and economic reforms desired by its people.

I am also confident that the talent, capabilities and hard work of each member of our team will help us to continue to grow and achieve the true potential of the company in the com-ing years.

I would like to thank my co-workers and colleagues for all their hard work and perseverance in what, by anyone’s reckoning, has been a very challeng-

ing year. I am proud to be part of this team, which in just over two decades has managed to grow PICO Interna-tional Petroleum into Egypt’s largest domestic exploration and production company.

Finally, I am also proud to be part of the larger PICO family. I hope PICO International Petroleum will in the coming years continue to be an essential part of PICO Group — one of the pioneering independent groups in Egypt — helping it maintain its position as a market leader within its key operating sectors in Egypt and the region.

Salah Eldin Ahmed DiabChairman and Founder

Highlights & Outlook

PIP’s average Operating Expense per barrel is USD 5.73, 28% below the Gulf of Suez historical average of USD 8/bbl

Across its asset base, PIP has drilled 25 develop-ment wells with a success rate of 96% (24 success-ful wells).

PIP expects to raise total produc-tion to 66,000 boepd in 2015 – for an annual production of 24 mmboe.

Expansion into international mar-kets plays a key role in PIP’s 2015 production targets.

*No new wells were drilled in 2010/2011

Since 2005, PIP has invested more than USD 200 million in acquisi-tions and USD 583 million in development and exploration

PIP has generated robust financial performance and is well positioned to expand as a leading indepen-dent E&P

OPEX/bbl(in USD)

Total Drilled Wells*(in USD)

WI Reserves Additions: 150% RRR(in USD)

Gross Daily Production Targets(in mboe)

2014-15 Production Target: 24 mmboe

Total Expenditures(in USD millions)

Historical Net Income(in USD millions)

F&D

Egypt NV

International

Current25,129 35,155

43,952 42,466 1,233

3,288 5,5892,630

3,847 3,4934,356

9,304 14,205

010,00020,00030,00040,00050,00060,00070,000

11/12 12/13 13/14 14/15

22%

5%

73% International 14 Mboe

Egypt NV 3 Mboe

Existing Assets 48 Mboe

214

14

311

16

66

14

64

14

0

10

20

30

F&D

Egypt NV

International

11/12 12/13 13/14 14/15


StrategyStrategy

A Sustainable Model for the Redevelopment of Mature FieldsExtending the production plateau at mature fields requires a new business model, one that PICO Interna-tional Petroleum (PIP) has refined in Egypt’s brownfield environment.

To achieve its ambitious long term targets, PIP has repeated a growth cycle that relies on technical produc-tion capabilities and core commercial strength.

Asset Acquisition PIP acquires carefully selected mature assets — small to medium sized de-clining fields with upside potential and near-field exploration opportunities. Often these assets are acquired from major oil producers such as Shell, Total and British Gas — allowing PIP to adapt and customize high operational and managerial standards.

Asset Integration: PIP integrates acquisitions into cur-rent operations and infrastructure creating greater scale and reducing costs.

PIP’s existing facilities in the Gulf of Suez, for example, allow low cost ac-cess to new reserves in the surround-ing acreage. This “Plug and Produce” strategy means PIP is best positioned to capture growth opportunities in the Gulf of Suez, where it aims to build an integrated oil-gathering hub, maximizing on economies of scale by acquiring marginal fields in surround-ing areas, as well as having access to internationally marketable volumes and international markets, via the Port of Suez and Suez Canal.

Field Specific Technology: PIP has significantly increased production and producible reserve levels at each of its assets in the Gulf of Suez, an area that accounts for the majority of Egypt’s oil production and is considered among the world’s most geologically complex regions.

At each of its fields, PIP generates a technically and economically sound Field Development Plan (FDP) and applies a field-specific suite of ad-vanced technology to reverse produc-tion decline and build reserves.

Cost Management PIP’s ability to operate its fields free of the heavy overheads inherent in most of its competitors’ business models is one of its key strategic advantages. This advantage is not only a product of the company’s careful internal cost structure, but is also the result of close coordination between PIP, its joint venture partners and government bodies at the fields PIP operates. Through this close coordina-tion, PIP ensures that the efficient models that guide its internal business structure are applied across its opera-tions. Additionally, this robust cost-management, alongside increasing production, allows PIP to generate positive net income despite aggressive capital expenditure.

ReinvestmentPIP reinvests in new opportunities (including new fields with favorable characteristics) and Near Field Explo-ration with notable success.

Since 2005, PIP has invested more than USD 330 million in acquisitions and USD 557 million in development and exploration, while across its asset base, PIP has drilled 25 development wells with a success rate of 96% (24 successful wells).

By carefully reinvesting its capital, PIP maintains a healthy Reserve Replacement Ratio (RRR) — from 2004 to 2010, PIP achieved an RRR of 267%.

Aggressive investment across PIP as-sets and into new ventures is expected to raise total working interest produc-tion sharply in coming years as PIP consolidates its presence in Egypt and expands its operations across the region.

Reinvestment

5

Cost Management

4

Field Specific Technology

3

Asset Integration

2

Asset Acquisition

1

• Entrepreneurial management culture has successfully led long term growth

• A dynamic E&P that has transi-tioned from an oil services firm into Egypt’s largest indepen-dent E&P

• Organic expansion in Egypt’s heavily brownfield environment has solidified a growth-cycle business model

• A scalable business model • Economies of scale support

lower costs for immediate term expansion in the Gulf of Suez

• Transferable experience• Active pipeline of opportuni-

ties to grow in Egypt — a consolidation of maturing fields in the Gulf of Suez

• Healthy acquisition pool across MENA and interna-tionally

• Regional contacts

• Largest independent Egyptian E&P with WI reserves base of 111 mmboe 2P and visible and accessible upside to reach 169 mmboe

• 2010 WI production of 18.6 mboepd expected to generate excess cash flow

• In-depth understanding of key fields, infrastructure and opera-tions in Egypt

• A well-capitalized balance sheet and access to funding — self-sufficient standalone company

• Based and operated in a low-cost environment

• Began production with mature fields — no unnecessary over-head

• Close coordination with joint venture partners to ensure effi-cient performance across field operations

• Track record of arresting pro-duction decline

• Maximizing recovery rates and increasing reserves base at mature fields

• Track record of uncovering new prospects — 97% success rate at new wells

Low Cost Structure Fit-for-Purpose Technologies

Reinvestment and Expansion

Growth Oriented Management

A Sustainable Model for

Independent Mature Field E&P

Significant Asset Base


Egypt’s Oil & Gas EnvironmentEgypt’s Oil & Gas Environment

Oil & Gas Exploration and Production in Egypt

Oil exploration and production in Egypt began in 1869, when the Anglo-Egyptian Oilfields Company (Shell-BP) won Egypt’s first oil con-cession after a discovery at Gemsa, off the West Coast of the Gulf of Suez. Production at the offshore field began in 1910, marking the beginning of Egypt’s more than one century as an oil nation. Three years later in 1913, fields near Hurghada were brought on-stream by Anglo-Egyptian as extensive mapping of the surrounding area unveiled a number of discoveries in the Gulf of Suez region. Five more oil fields were discovered during the interwar period, and by the 1950s the Gulf of Suez and the Sinai Desert had been extensively mapped as exploration companies expanded their interest in the region.

Despite significant exploration activ-ity throughout the middle part of the century only 25% of Egypt’s territory

had been explored by the 1980’s. This prompted the Egyptian General Petroleum Corporation (EGPC) to begin a concerted effort to promote exploration in the country by offering attractive contracts to foreign compa-nies. Egyptian exploration has been highly successful in the last ten years, maintaining a rolling average success rate above 25%. Egypt’s petroleum sector now accounts for a notable portion of both the country’s GDP (rising to 15.6% in 2008-09), and its total exports (petroleum exports ac-counted for 45% of the country’s total exports in 2010-11).

Egyptian natural gas production has also blossomed in recent years, more than doubling from 2003 to 2010. Both domestic demand and exports are the key drivers behind the increased production levels, with Egypt now climbing to eighth place in global LNG export tables.

Oil Reserves (Remaining) 4.4 billion barrels (1/06/2010)

Liquids Production 736 thousand b/d (2010)

Liquids Reserves/Production 16.7 years

Gas Reserves (Remaining) 78.0 tcf (end 2010)

Gas Production 5.9 bcfpd (2010)

Gas Reserves/Production 36.2 years

Key Facts

Egypt’s Infrastructure AdvantageEgypt’s geographic position places the country among the world’s most critical transport hubs. The Suez Ca-nal and Sumed (Suez-Mediterranean) pipeline together move some three to four million barrels of oil each day and are central export routes for Arabian Gulf oil. The 322 kilometer, 2.5 million bbl/d capacity Sumed pipeline connects the Mediterranean and the Gulf of Suez, running from Ain Sukhna on the Gulf of Suez to Sidi Kerir on the Mediterranean. The Suez Canal, meanwhile, is one of the world’s most valued waterways. In 2010, petroleum (both crude oil and refined products) and LNG

Egypt’s Fiscal AdvantageBased on Production Sharing Contracts (PSC), Egypt has one of the most stable fiscal systems world-wide. Unlike other systems where a contractor pays taxes and royalties di-rectly to the host government, PSCs allow for one of the country’s govern-ing bodies, such as the Egyptian

Egyptian Oil Production(bopd)

Source: BP Statistical Review of World Energy, June 2011

Egyptian Natural Gas Production(bcfpd)

Oil and Gas Revenues(in USD billions)

Source: BP Statistical Review of World Energy, June 2011

Egyptian gas production has more than doubled from 3 bcf in 2003 to 6 bcf in 2010 — Exports and strong domestic demand are key drivers behind increased production levels.

Despite a brownfield environment, Egypt’s petroleum sector, including refining, accounts for a notable por-tion of the country’s GDP — 15.6% in fiscal year 2008-2009.

Recent exploration activity has expanded Egypt’s reserve base and production output.

Oil: Proven Reserves(bbo)

0

1

2

3

4

5

20

10

20

09

20

08

20

07

20

06

20

05

20

04

20

03

20

02

20

01

Drilling Activity and Commercial Success Rates

Source: PICO Analysis

Egyptian exploration has been highly successful in the last ten years, maintaining a rolling average suc-cess rate above 25%.

0%5%10%15%20%25%30%35%40%45%50%

020406080

100120140

1988 1993 1998 2003 2008

Wells Success Rate (%)

5.8 77.7

10 11.44.4

8.39.9

1315.1

0

5

10

15

20

25

30

2004

-200

5

2005

-200

6

2006

-200

7

2007

-200

8

2008

-200

901020304050607080

Per

cent

ann

ual G

row

th

0

1

2

3

4

5

6

7

19

80

19

82

19

84

19

86

19

88

19

90

19

92

19

94

19

96

19

98

20

00

20

02

20

04

20

06

20

08

20

10

0100200300400500600700800900

1,000

19

65

19

69

19

73

19

77

19

81

19

85

19

89

19

93

19

97

20

01

20

05

20

10

Egypt has climbed to eighth place in global LNG exports tables, with potential to move higher among the world’s gas elite.

Gas: Proven Reserves(bcm)

0.00

0.50

1.00

1.50

2.00

2.50

19

80

19

82

19

84

19

86

19

88

19

90

19

92

19

94

19

96

19

98

20

00

20

02

20

04

20

06

20

08

20

10

Total LNG Exports(bcm - 2010)

Total Gas Pipeline Exports(bcm - 2010)

accounted for 13% and 11% of Suez cargos, respectively. Total petroleum transit volume was close to two mil-lion bbl/d, or just under 5% of global seaborne oil trade in 2010.

Egypt has also gradually expanded its domestic gas pipeline infrastructure, growing the country’s network along the eastern Mediterranean Coast to accommodate rapidly growing gas production. It has also outlined ambitious plans to extend the 1,200 kilometer Arab Gas Pipeline (AGP) which currently exports natural gas to Jordan, Syria and Lebanon, with a separate line to Israel. Plans, agreed in 2006, include extending the AGP to

General Petroleum Company (EGPC) or the Egyptian Natural Gas Holding Company (EGAS), to pay a percentage of royalties and taxes on behalf of the contractor, straight from the govern-ment’s share of profits. Also as part of such contracts, an agreed portion of production revenues is used to recover

a percentage of the total operating, capital and exploration costs incurred by the contractor. The remaining portion of revenues is shared between the contractor and the government, as per the terms of the agreement. The latter have varied over time, but only within a relatively narrow range.

reach Turkey, where it would connect to the planned Nabucco Pipeline and onward to Europe.

Egypt is also quickly emerging one of the region’s key refining hubs. With eight refineries providing total capacity of between 725,000 boe/d to 775,000 boe/d, Egypt’s downstream infrastructure is already the most comprehensive in Africa, ahead of the nearest competitors Nigeria, South Africa and Algeria. Egypt’s capacity is set for further expansion — four new refineries in the works are expected to raise the country’s refining capacity by more than 1.2 MMboe/d, nearly tripling capacity in the coming years.

Total Production

(20-40%)

Cost Recovery(Contractor)

Exploration Costs(20-25%/year in same

fiscal year)

Development Costs(20-25%/year in same

fiscal year)

Operational Costs(in same quarter) Government Contractor

(60-80%)

ProfitOil/Gas

Lebanon (0.15)

Syria (0.69)

Israel (2.10)

Jordan (2.52)

Spain (2.62) United States (2.07)South Korea (0.98)France (0.73)Italy (0.72)Japan (0.57)Chile (0.55)Kuwait (0.33)

Turkey (0.27)Belgium (0.17)Taiwan (0.17)Mexico (0.16)United Kingdom (0.12)

Greece (0.08)India (0.09)

China (0.08)


Global Oil & Gas EnvironmentGlobal Oil & Gas Environment

A New Price NormalSince 2003, rapidly rising and largely sustained higher oil prices have caught many by surprise. After prices remained largely bound in the 20-40 USD/bbl range throughout the second half of the 1980’s and all of the 1990’s, a subsequent erosion of the spare capacity in the oil supply chain caused prices to rise for a good portion of the last ten years. The first decade of the 21st century also saw global consumption outpace produc-tion as demand surged in many parts of the developing world.

Many analysts suggest that global oil resources are scarce and stretched and that, as a result, the world’s oil producers will struggle to deliver the incremental supplies necessary to keep pace with the demand of a growing world economy. This is a view underpinned by several themes: most notably, two decades of a sluggish worldwide exploration investment, poor expectation of finding new oil provinces — limited access to some hydrocarbon rich regions — and an increasing number of mature basins that are on production.

Global production has grown at a compounded annual growth rate (CAGR) of 0.9% between 2003 and 2010, while global consumption has grown at a CAGR of 1.3%.

Energy consumption growth in developing economies is outpacing declining oil demand in most devel-oped markets. Global oil demand is currently growing at more than 1 mm bbl/d.

Both China and the Middle East are experiencing major economic growth, with fast-rising GDP/capita, growing car ownership penetration, and surg-ing near-term demand for gasoline and oil. Conventional oil discoveries have not kept pace with oil produc-tion over the past three decades, and as a result of growing demand in these regions, the trend continues.

Significant Demand for New Oil

Sources — 50 mmbbl/d required from new fields by 2035The International Energy Agency’s (IEA) World Energy Outlook 2010, the intergovernmental organization’s flagship publication, suggests in its baseline “New Policies Scenario” that the world will require 50 million barrels of oil per day to be produced from new fields by 2035. This predic-tion represents the organization’s moderate case scenario, assuming the introduction of new measures on a relatively cautious basis that implement the broad policy com-mitments already announced, including national pledges to reduce greenhouse-gas emissions and, in certain countries, plans to phase out fossil energy subsidies.

The IEA also finds that though world oil consumption rises from 84 mbbl/d in 2009 to 99 mbbl/d in 2035, three-quarters of the world’s oil production from existing fields will need to be replaced to compen-sate for the predicted decline in pro-duction as existing fields pass their peak and witness falling production rates.

In total, the world will need to pro-duce 50 million barrels of oil per day from new fields — the production capacity of Saudi Arabia will need to be recreated four times in the next 25 years. Most World Oil Remains

UndergroundWhile the world’s oil resources are certainly finite, the world’s fossil fuels endowment is neither stretched nor unable to replace current production in the near term. Indeed, the exact volume of the world’s remaining reserves represents a matter of sig-nificant uncertainty, and continues to generate a good deal of debate. The remaining conventional oil (liquid petroleum reachable with current technology and at current prices) is likely just less than 1 trillion barrels – this equates to 30 years of 2010 consumption and approximately an equal value to all oil consumed in the

Source: BP Statistical Review of World Energy June 2011

0.0020.0040.0060.0080.00

100.00120.00

19

20

19

28

19

36

19

44

19

52

19

60

19

68

19

76

19

84

19

92

20

00

20

08

Crude Oil Prices(USD/bbl in 2010 dollars)

Source: IEA, World Energy Outlook 2010

Conventional Oil Discoveries and Production Worldwide

0

50

100

150

200

250

300

0

10

20

30

40

50

60

2000

-200

9

Mill

ion

barr

els

Bill

ion

barr

els

per

year

1960

-196

9

1970

-197

9

1980

-198

9

1990

-199

9

DiscoveriesProduction


Oil Consumption(thousand bbl/d)

0

5

10

15

20

25

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

China USA Europe

Japan Total Middle East


Global Oil Production and Consumption(thousand bbl/d)

Global Oil ProductionGlobal Oil Consumption

020,00040,00060,00080,000

100,000

19

65

19

69

19

73

19

77

19

81

19

85

19

89

19

93

19

97

20

01

20

05

20

09

World primary energy demand by fuel in the New Policies Scenario(Mtoe)

Source: IEA, World Energy Outlook 2010

CoalOil Nuclear HydroGas

Biomass Other renewables

0

1,000

2,000

3,000

4,000

5,000

1980

1990

2000

2010

2020

2030

2035

Source: Owen, Inderwildi and King, Oil Policy Journal

Amended conventional world oil reserve estimates that account for OPEC false additions and the inclusion of Canadian tar sands

Significant resources yet to be produced

a This figure was further reduced by 12.5% to account for NaturalGas Liquids according tot he WEO 2008.

LiquidsOGJ Jan2009Crude oil,condensate

WO Yearend2007Crude oil,condensate

BPSR June2009Conv.crudea

Independent authorsConv. crude

Independent authorsConv. crude

Billion barrels (Gb) 882 892 830 903 872

Source: Total

Oil resources Gas resources

~3,000 Bboe

Unconventional resourcesoil shale

shale gas,heavy oil coal bed methane,

tight gasNew discoveries

and increased recovery rate34 years of productionat current pace

100 years

70 years

~2,500 Bboe

49 years of production at current pace

135 years

Already produced

80 years

Conventional gas resources concentrated in Russia, Iran and QatarDevelopment of shale gas production in the US driving a re-evaluation of unconventional gas resources

Conventional oil located mainly in the Middle EastHeavy oil concentrated in Canada and Venezuela


Global Oil & Gas EnvironmentGlobal Oil & Gas Environment

past 150 years. Taking unconventional oil into account (such as tar sands and heavy oil), the world’s remaining endowment could rise to as high as 2-3 trillion barrels of crude and 2.5 trillion boe of gas.

Despite the vast amounts of fossil fuel resources left in the ground, however, the volume of oil that can be commercially exploited at prices the global economy has become ac-customed to, is limited and will soon decline. As a result, oil may soon shift from a demand; led market to a sup-ply constrained market — a shift that will dramatically affect the economics of the oil industry.

The world has produced 1 trillion barrels of oil; 2 trillion more remain in the ground.

A Supply Constrained Market Moving forward, there is little doubt that incremental supply will depend on the aggressive development of known resources, particularly in many parts of the Middle East and North Africa, as well as the development at high-cost of unconventional oils, new offshore fields, and oil from new difficult basins.

One of the first responses to a supply constrained economic envi-ronment is increasing oil recovery factors at today’s mature, producing basins, where output is stable or declining. Presently, some 70% of world oil is produced at mature fields, usually more than 30 years old, which are often operated using technology put in place when the field was originally developed. In 2007, production from 16 of the top 20 producing fields was in terminal decline, according to the IEA, and certainly many of the Middle East and North Africa’s smaller fields are in similar condition. Recovery of ultimate reserves at mature fields is often a mere 20%.

Mature Field Economics—A vast target for secondary and tertiary recoveryBy implementing secondary recovery, or Improved Oil Recovery (IOR)

processes, oil producers can signifi-cantly increase cumulative output at producing fields.

When secondary recovery processes are implemented from the start of production — as is now standard practice with new oil fields — or later during the primary phase, recovery rates can, theoretically, reach up to 70%. Though recovery rates above 60% are very rare, secondary recovery techniques can often increase a field’s ultimately recoverable reserves (URR) to 45-50%. Such achievement signifi-cantly extends today’s global average recovery rate, often estimated between 27% and 35%.

Tertiary, or enhanced oil recovery (EOR) methods, are applied at the end of the secondary phase. These technologies can include thermal, miscible or chemical processes, which attempt to sweep out as much as pos-sible of the remaining oil. The 30-year history of this technology in the US and other countries indicates that it is possible to recover an additional 7-15% after secondary recovery meth-ods by applying EOR technology.

As oil prices rise and national produc-tion moves into decline, investment in secondary and tertiary recovery is ca-

pable of creating value at mature and declining fields. The United States, for example, demonstrated a recovery factor of 22% in 1979, ten years after the country’s oil production peaked and five years after the end of an oil embargo that dramatically increased global world oil prices. In the years following, the United States increased its recovery rate to 35% by 1999, and some estimates suggest its recovery rate reached 39% by 2007.

PICO International Petroleum is applying these technologies to expand Egyptian and regional oil production as many small and medium fields reach decline and remain underin-vested.

Gas Supply is Set to Change En-ergy Economic DynamicsWhile oil demand is expected to rise significantly in the coming years and decades by nearly all forecasts, con-sumption of natural gas is expected to rise still faster as vast supplies, low costs and environmental factors encourage substitution. In fact, the IEA suggests that global gas demand could rise by more than 50% over the next 25 years, as gas outstrips coal to come close to equaling oil in the global energy mix. In such a scenario, gas would compose 25% of

Billions of barrels

80

60

40

1000 2000 3000

20

100

$/bbl

water

OtherConventional

Deep

Ultradeepwater

EnhancedRecovery

ExtraHeavy

oil

Oilshales

Arctic

Break even oil price in 2010

(IRR >10%)

OPECMiddle East

Sources: IEA, CERA, Total

An array of factors point toward increased use of natural gas.

Gas Rises

World natural-gas production under the IEA’s ‘golden age of gas’ scenario Natural-gas prices

6,000

4,000

2,000

0

$16

12

8

4

0

billion cubic meters per million BTUs

Forecast

20

08

20

06

20

10

20

07

20

15

20

20

20

08

20

25

20

09

20

30

20

10

20

35

20

11

Source:IEA, Thomson Reuters via WSJ Market Data Group (prices)

Huge investments for the highly technical oil projects

the world’s energy mix by 2035, up from 21% now.

Meeting that demand would require an increase in production equivalent to three times the amount of gas produced by Russia today, which the agency imagines being handily met by a mixture of conventional gas and shale gas. According to the IEA’s pre-dictions, non-OECD economies will account for 80% of gas consumption growth, China’s demand rises from about the level of Germany in 2010 to match the entire European Union in 2035, and the Middle East’s demand for gas nearly doubles to match Chi-nese consumption; demand in India in 2035 is four times that of today.

The global natural gas market is in the midst of a revolution that has huge implications for the future of energy. Egypt, with its sizable gas reserves, central geography and well-developed petroleum infrastructure, is set to play a key role in this unfolding energy environment.

Asset Profiles

20 21PICO International Petroleum • 2011 Annual ReportPICO International Petroleum • 2011 Annual Report

Asset ProfilesAsset Profiles

Amal Geisum and Tawila

The Amal Development Lease is located off the southern province of the Gulf of Suez, approximately 15km southeast of BP’s Morgan Oil Field. Since acquiring a large majority share in the field in 1994, PIP has success-fully boosted production, particularly with sizable new discoveries.

Amal has three reservoirs with identi-fied hydrocarbon reserves - the Rudeis, the Belayim and the Kareem – com-prising a total of 19 drilled wells. PIP discovered oil at the Rudeis Reservoir, successfully drilling four of five wells at the site in 2007-08. The Belayim Reservoir was also confirmed as an additional gas reservoir target, and has since provided substantial additional reserves at the field.

The site also has two offshore plat-forms, as well as production and export pipelines including two production lines to onshore facilities, and gas and oil export pipelines. Further pipelines are currently planned, including an oil export line to SUCO’s Zeit Bay facilities.

Ownership: PIP 86.4%, Greystone13.6%Operator: PICO Amal Petroleum CorporationAcquisition Year: 1994Acquired from: Total

Ownership: PIP 60%, KUFPEC 40%Operator: PICO Gulf of Suez Ltd.Acquisition Year: 2007Acquired from: EGPC

In 2005, PIP finalized negotiations with the Egyptian General Petro-leum Corporation (EGPC), offering an aggressive Full Field Develop-ment Plan (FFDP) in exchange for Amal’s gas production and a 15-year extension. Within three years of the FFDP, PIP averaged approximately 9,000 bopd at Amal, surpassing the field’s historical high.

As part of its development plan for the site, PIP also aims to undertake comprehensive debottlenecking, as well as expanding processing and storage facilities; the latter is expected to immediately double daily oil and gas production. PIP will also begin work on an additional 13 wells to develop discovered oil potential at the site, which promises to yield yet more potential. Being structurally-complex and comprising a number of fault blocks, Amal still contains areas that have never been drilled. Thus, further oil reserves could still be unearthed, possibly in the deeper Pre-Miocene section as seen in a nearby acreage.

Concession Size:

26.8km²

Concession Size:

105.0km²

Number of Wells:

19Number of Wells:

87

Average Daily WI Production 2010–2011:

6,137 boepd


4,296 bopd

Amal WI Reserves Geisum and Tawila WI Reserves (in mmboe) (in mmbo)

The Geisum and Tawila site is located at the southern entrance of the Gulf of Suez, covering the North Gesium, South Gesium, Northeast Gesium and Tawila West fields. The site, which in-cludes 45 wells, six offshore platforms, five production pipelines and an on-shore storage facility, forms the center of PIP’s production and storage hub.

PIP and KUFPEC — with PIP as the operator — were awarded the license for Geisum and Tawila in 2007 from the Egyptian General Petroleum Company, making the site Egypt’s first producing asset to become privatized. The acquisition included a ten-year production sharing agreement, with two 5-year extensions.

After taking over the concession, PIP carried out a program to shore up field production and reverse its prevailing decline trend. It has since completed 13 new development wells and five rig-assisted work-overs, in addition to many rigless work-overs. This led to a 100% production increase after nine months - a result that surpassed all

expectations.

Since then, further investments and work to optimize operations have enabled the site to become the produc-tion, storage and infrastructure hub in the area, with its facilities significantly reducing PIP’s operations costs by sup-porting four of its neighboring fields.

Going forward, PIP plans to further expand Geisum and Tawila’s process and storage capacity to accommodate the recent production increase and to continue servicing surrounding fields. This includes plans for an additional storage tanker at the onshore Geisum terminal, as well as a sixteen-inch pipe-line that will transport oil from PIP’s Amal Field to the newly-expanded storage facilities. The drilling of new wells and production increases have also provided encouraging geologi-cal and engineering data promoting further drilling to tap and recover the remaining potential hydrocarbon reserves at the site.

Oil

Gas

Oil

Contingent Reserves

31.8

64.026.9

20.3

22 23PICO International Petroleum • 2011 Annual ReportPICO International Petroleum • 2011 Annual Report

Asset ProfilesAsset Profiles

Gemsa Zaafarana

The Gemsa oil field is located offshore in the southern province of the Gulf of Suez, at a water depth of 20 meters. Gemsa was the first oil field discovered in Egypt in 1869. Production began in 1910 after BP and Shell formed the Anglo Egyp-tian Oilfields (AEO) joint venture to develop the site. In 1913 AEO also brought onstream the nearby Hurghada field.

PIP acquired Gemsa, a mature asset that is very responsive to fit-for-purpose secondary recovery applica-tions, in 1995. Starting in 1998, PIP designed and implemented a second-ary recovery water injection scheme in the producing Nukhul Sands res-ervoir. Artificial lifting, by means of jet pumping, was gradually introduced as the producing water cut started to

Ownership: PIP 100%Operator: PICO Gemsa Petroleum CompanyAcquisition Year: 1995Acquired from: Shell

Ownership: PIP 55%, Sahara Oil and Gas 20%, SK Energy 25%Operator: PICO Zaafarana Petroleum CompanyAcquisition Year: 1998Acquired from: Shell

rise. Consequently, the production level increased from approximately 1,200 bopd to a peak of 5,628 bopd in early 2006.

Today Gemsa includes 8 wells, one offshore platform, production and ex-port lines (including one production pipeline and one export pipeline) and an onshore processing facility that comprises separation of oil and gas as well as storage tanks.

PIP aims to develop the site by extending neighboring fields into Gemsa, allowing neighboring free blocks to be integrated into its opera-tions. PIP has also recently drilled the SE-11 exploratory well, discovering a possible 4.0 mmbo in contingent resources in the Pre-Miocene and Basement Reservoirs.

Concession Size:

12.0km²

Concession Size:

22.0km²

Number of Wells:

8Number of Wells:

8


1,615 boepd


2,801 bopd

Gemsa WI Reserves Zaafarana WI Reserves (in mmbo) (in mmbo)

PIP assumed operations at Zaafa-rana in 1999 after it acquired 60% of British Gas’s 50% share in the concession. In 2010 PIP acquired a further 25% share from Anadarko Petroleum.

The site’s infrastructure includes eight wells operated by electrical submersible pumps (ESP) as well as the only Floating Production, Stor-age and Offloading (FPSO) vessel in the region, with a capacity to process and store 800,000 bbls of crude.

Since taking over operations at Zaafarana, PIP has arrested the field production decline trend and maintained a gross production plateau at 7,000 to 8,000 bopd until 2009, when the company began ex-periencing complications with power

generation which limited production capacity. Following an upgrade to the site’s electric system, gross daily capacity is expected to resume once again at 8,000 bopd. Further pro-grams are also underway to address logistical bottlenecks with the water supply system.

A very active water drive presents promising options for oil recovery in the field; also, geological and reservoir studies in the area indicate the presence of reserves in the Kareem sands which are expected to be brought into production. PIP also expects the reprocessing of the available 3D seismic data of the Zaafarana area to significantly enhance current understanding of the Rudeis structure, revealing any existing potential in near fields.

Oil

Contingent Reserves

Oil

Contingent Reserves

8.8

4.0

22.4

2.5

24 25PICO International Petroleum • 2011 Annual Report

Asset Profiles

Horus (East Alamein)

South Ramadan Marine

PIP has owned a 35% equity stake in the East Alamein Development Lease, operated by Kriti Oil & Gas, since 2007. The field is PIP’s first onshore interest and the company’s first move toward production in Egypt’s Western Desert fields.

The 107 square kilometer site has 16 wells and is equipped with basic gathering and generation facilities for artificial lifting systems, Electric

Ownership: Horus Petroleum Company 35%, Kriti Oil and Gas: 65%Operator: Kriti Oil & GasAcquisition Year: 2007Acquired from: Kriti Oil & Gas

Ownership: PIP 24.5%, General Petroleum Company (GPC): 50%, Greystone: 12.75%, Petzed: 12.75%Operator: PIPAcquisition Year: 1993Acquired from: Total Proche-Orient Company (TPO)

Submersible Pumps (ESP) for deep zones in addition to a well-established pipeline system moving oil to the El Hamra export terminal on the Mediterranean Coast, some 36 km to the north.

Reserves at the Horus field are low risk as a relatively large part of remaining reserves are proven and producing and upside potential is likely accurate in quantity and accessibility estimates.

Concession Size:

107.0km²

Number of Wells:

16


619 boepd

PIP owns a 24.5% minority stake in the South Ramadan Marine Develop-ment lease which is located off the southern province of the Gulf of Suez, 15km northeast of the Ras Shukeir Field Base. The site includes two plat-forms and two production lines. The Ras Ghareb Terminal is used to store crude oil.

Acting as the operator, PIP has drilled two wells. The field is intermittently producing at a low rate but potential work-overs could raise production volumes.

Horus Total Expenditures FY 2007 through June 2011(USD millions)

CAPEX

OPEX

20.3

58.0

The latest block evaluation studies conducted by the General Petroleum Company, GreyStone and PIP independently indicate significant hydrocarbon potential at the Kareem, Nezzazat and Nubia Sandstone Reservoirs. Estimated prospective resources at the field are around 9.1 mmbbls according to 2011 ISCO study.

This upside potential is also supported by recent oil discoveries by BP, Edfu and Saqqara at sites just south of the South Ramadan Development Lease.

The latest block evaluation

studies conducted by the General

Petroleum Company, GreyStone and

PIP independently indicate significant

hydrocarbon potential at the Kareem,

Nezzazat and Nubia Sandstone

Reservoirs.


Senior ManagementSenior Management

Salah Eldin Ahmed Diab (Chair-man and Founder) graduated in 1972 from Ain Faculty of Engineer-ing (Production Section) at Ain Shams University, Cairo. He is the Founder and CEO of PICO Group (a group of companies that has been successfully operating in key sectors of the Egyptian Economy). He is also Chairman of Sunset Hills for Reconstruction Co., a Board Member of Egyptian Multi Investment and Tourism Companies, Co-founder of the Cairo Capital Club and Co-founder of one of Egypt’s largest independent daily newspapers. More-over, Mr. Diab is actively involved in the local business community as a leading member of the American Chamber of Commerce, the British Egyptian Businessmen’s Association, the Egyptian Businessmen’s As-sociation and the Cairo International Lions Club. He is Founder of the Family Business Program in Egypt.

Tawfik S. Diab (Chief Executive Officer) graduated in June 1998 with a Bachelor of Science degree in Mechanical Engineering from the American University in Cairo, after which he completed a range of independent coursework in areas including financial analysis, corporate and investment appraisal, and risk analysis. With experience in functions including financial analysis, treasury and management, he joined PICO Investments in 1998 as Investment/Portfolio Manager, before becoming PICO Investments’ Managing Direc-tor from 2000 to 2002. Mr. Diab later occupied the position of Business Development Manager at PICO Energy from June 2002 to December 2003, after which he moved to PICO International Petroleum in January

Senior Management2003, where he is Managing Direc-tor responsible for all E&P Joint Venture partnerships with EGPC, GEMSA Oil Co., AMAL Oil Com-pany, Shukeir Offshore Oil Co. and recently Oasis Oil Company. He is also responsible for financial and legal restructuring issues and the evaluation of new investment opportunities for the Pico Group.

Shawky Abdeen (General Manager) graduated in 1954 with a Bachelor of Science degree in Geology and Chemistry from Ain Shams Univer-sity, Cairo. Mr. Abdeen started his career as a surface Geologist (1954 – 1958) with Sahara Petroleum Com-pany (Conorada) before he joined the Egyptian General Petroleum Corporation (EGPC) from 1958 to 1977, where he worked in various exploration activities. He ended his career at EGPC as Exploration Manager. Mr. Abdeen later joined Gulf of Suez Petroleum (GUPCO), one of Egypt’s leading oil companies, as Exploration Manager and Board Member, a position he held from 1977 to 1988. From 1988 until 1993, Mr. Abdeen was Chairman of the Board of Directors at GUPCO, after which he headed Kuwait Petroleum Company’s (Kufpec) Egypt opera-tions from 1993 to 1998. He joined PICO International Petroleum as General Manager of the company’s Joint Venture with Kufpec, AMAL Petroleum Company (AMAPETCO) from 1998 to 2002, before holding the same position at PICO’s GEMSA Petroleum Company (GEMPETCO) joint venture holding from 2002 until 2005. As of January 2006 Mr. Abdeen has been Business Development Gen-eral Manager at PICO, responsible for New Ventures & Exploration and

the company’s Geological studies. Mr. Abdeen was recently appointed by the Egypt’s Minister of Petroleum as Chairman of the Higher Committee for National Resources responsible for the nation’s oil, gas and minerals exploration. Medhat El Sheemy (Technical Manager) graduated in 1969 with a Bachelor of Science degree in Petroleum Engineering from Cairo University. Mr. El Sheemy has gained more than 37 years of experience in the upstream oil industry, first at the Gulf of Suez Petroleum Company (GUPCO), where he worked from 1969 to 1976. He later worked in Abu Dhabi, where he gained international experience as Senior Petroleum En-gineer, Senior Planning Engineer and Head of Production Technology at Abu Dhabi for Onshore Oil Opera-tions from 1976 to 1997. In 1997, Mr. El Sheemy joined PICO Internation-al Petroleum as Operations General Manager at GEMSA Petroleum Co. (GEMPETCO), one of PICO’s Joint Venture holdings. In 2000 he joined PICO as Petroleum Development Manager, and subsequently as Asset Manager, before obtaining his present position as Technical Manager in 2004.

Said Hilal (General Engineer-ing Manager) graduated in 1965 with a Bachelor of Science degree in Mechanical Engineering from Alexandria University. Mr. Hilal has gained 19 years of experience in Construction Supervision at both off-shore and onshore oil projects in the Gulf of Suez area. His background also includes 12 years of experience as Projects General Manager for major gas production projects in the

Western Desert. Mr. Hilal has acted as a member of PETROJET’s Board of Directors and was appointed to Engineering at the Petroleum and Process Industries’ (ENPPI) Board of Directors, where he also occupied the position of General Manager for Overseas Projects from 1997 to 1999.

Hamed Ibrahim Abdel Karim (Ex-ploration Manager) graduated with Bachelor of Science degree in Geol-ogy from Cairo University in 1979. Mr. Abdel Karim started his career as Well Site Geologist for the Gulf of Suez Petroleum Company (GUPCO) in May 1980. He occupied the posi-tions of Structure Geologist, Field Operations Supervisor, Geological Operations Section Head, Explora-tion/Reservoir Geologist, Field Study Team Geologist, and then Geological Operations/Petrophysics Department Head from 1994 till 1996 when he resigned from GUPCO. During his service with GUPCO he was assigned to work for Amoco Egypt Oil Company (AMOCO) for more than a year from 1993 till 1994 as Senior Geologist responsible for all Geological operations and petrophys-ics processes for both operations and non-operations areas (Nile Delta concessions for Gas Production). He then moved to work as Senior Sales Representative for Numar UK Ltd. from August 1996 till January 1998, then to EGYPT NMR of Hallibur-ton Egypt as Logging & Perforation Technical Advisor from January 1998 till August 2002. He became Hal-liburton Account Manager for BP/Gupco in Egypt from August 2002 till July 2003, ending his service with Halliburton as Senior Account Man-ager (Business Segment Manager) for Logging and Perforation in Egypt/

Libya from July 2003 till February 2006, after which he joined PICO as Exploration Manager. Mohamed Mostafa (Finance Man-ager) graduated with Bachelor of Commerce majoring in Accounting in 1988 from Cairo University. He started his career as an accountant at Suez Oil Company (SUCO) in 1989 where he held several positions across materials and fixed assets groups. He left SUCO in 1995 as Senior Accountant before joining PICO Petroleum Panama in 1996 as Accounting Manager and later Fi-nance Manager. Since August 2003, Mr. Mostafa has been responsible for all finance disciplines — includ-ing accounting, budget, treasury, taxation — and works closely with joint venture partners and EGPC. He was nominated in 2005 as Board Member of South Ramadan Marine Committee, a PICO Joint Venture with GPC and EGPC.

Tarek Hamouda (Human Re-sources, Admin and IT Manager) graduated with a Bachelor of Arts degree in Commerce from Cairo Uni-versity in June 1992. After graduating, Mr. Hamouda joined Halliburton Egypt, and in 1998 he moved on to Halliburton Oman. In 2000 Mr. Hamouda assumed the role of Oracle implementation Manager at PICO Petroleum Services. In 2002, he joined Egyptian Drilling Company as Human Resource and Training Man-ager handling Egypt, Syria, Saudi Arabia, Libya, Qatar and Gabon, helping to establish fully functioning branches in Libya, Qatar and Gabon. In 2011 Mr. Hamouda joined PICO as Human Resources, Admin and IT Manager.

Hamdy El Shennawy (JV-Amapetco General Manager) graduated with a Bachelor of Science degree in Petroleum Engineering in 1965. Throughout his history in the petro-leum sector, Eng. El Shennawy has accumulated extensive experience by working in many different companies in numerous positions, starting as Pe-troleum Engineer Trainee in NASR PET from 1965 to 1967. He then moved on to a position as a Drilling Engineer and Drilling Supervisor in Gupco from 1967 to 1979. He later became the Drilling General Manager and Field General Manager at Suez Petroleum Company (SUCO) from 1979 to 1985, after which he returned to Gupco from 1985 to 1989 to hold the position of Engineering General Manager. Eng. Shennawy later became a Board Member and Operations General Manager at Geisum and Bapetco from 1989 to 1993, later becoming the Chairman and Managing Director of Zafco then Suco from 1993 to 1998. He then joined the Ministry of Petroleum in November 1998 as a Consultant to the Minister, until 2000 when he joined PICO, where he now occupies the position of General Manager at Amal Petroleum Company (Ama-petco).

Omar Hassan (Corporate Develop-ment Manager) graduated from Duke University with a Bachelor of Arts in Political Science in June 2002. On graduation he joined the International Development Team for Booz Allen Hamilton. In September of 2003, Mr. Hassan joined the PICO Group and in 2004 was assigned to focus his efforts on the corporate development activities of PICO International Petroleum.


Continual Improvement

Meeting the Highest International Standards in Health Safety and Environment

HSE & CSR

The Health, Safety and Environment (HSE) policy of PIP stands at the core of its corporate culture and is guided by the highest international standards. We work closely with all our affiliates and Joint Ventures ( JV) to ensure these standards are imple-mented throughout our operations, and to promote awareness of their importance throughout our industry as a whole. PIP participates in the annual National Oil Spill Meeting hosted by the Egyptian General Petroleum Company, and both PIP and all of its affiliates have adopted the Equator Principles for the assessment and man-agement of social and environmental risks in project management.

All of PIP’s HSE activities are conducted according to the standards outlined by our HSE Management System, aiming at the establishment, implementation, quality control, and continuous review and improvement of PIP’s HSE practices. Our main HSE aims are:1 To stop any cause or harm to people

in our business.2 To eliminate any damage to prop-

erty, assets or to the environment.

Corporate Social Responsibility

Excellence and

Alashanek Ya BaladyThrough a specialized committee entirely devoted to social activities, PIP is currently working closely with Alashanek Ya Balady (AYB), an NGO dedicated to alleviating poverty in Egypt with a focus on training and educating people from underprivi-leged communities, thereby helping them find employment or to start their own entrepreneurial projects.

PIP is currently helping to finance several micro projects put forward by AYB, varying in size and type of industry. When choosing to finance

a project, we put special emphasis on the business plan and the project owner’s expertise, as well as the number of people who will benefit from the project, either directly or indirectly.

On the education side, PIP and AYB are working to help develop new skills for undereducated candidates from rural areas. PIP’s employees volunteer to tutor and mentor these candidates on life skills, as well as providing vocational training focusing on the knowledge and skills necessary for employment within the private sector.

Taking steps to firmly embed HSE values into our wider corporate culture, PIP now holds an annual “Safety Day” for all employees — including those in all our JVs. As part of the event, a Safety Award is given both to a management and a general level employee in order to recognize and encourage achievement in this area.

This year, we also conducted a one-day workshop given by the Royal Society for the Prevention of Accidents (RO-SPA) for all senior management — including those in all our JVs — with the aim of familiarizing all top line management with the essential role a manager plays in the enhancement of HSE performance among staff.

All our employees are encouraged to take a proactive approach to HSE standards, rather than to merely imbibe directives. To this end, PIP has put in place a Hazard Report-ing System, which allows staff to identify and report health and safety hazards themselves. This year, PIP also conducted a “Safety Perception

Survey”, where staff were encouraged to evaluate the company’s safety pro-gram, pointing out any deficiencies, as well as contributing suggestions for improvement.

In order to inculcate such attitudes among our staff as early as possible, we now give priority within our recruit-ment process to those candidates with greater knowledge, awareness and practice of HSE principles and standards. We have also taken steps to ensure that greater prominence will be given in future to HSE Roles & Responsibilities within all job descrip-tions given to prospective employees. Once candidates join the company, continuous emphasis will be applied to this area, with “HSE achievements” now included as a category to be used during performance evaluations.

Estab

lishment

Good Prac

tice

Compliance

Implementation and


Each company within the PICO Group is fully independent, highly technical and specialized, each with its own requirements, management team, financial structure, growth path and focus for value creation.

PICO GroupPICO Group

PICO Group

PICO Group is one of Egypt’s largest and oldest private sector conglomer-ates operating in diverse sectors such as agriculture, food, real estate, financial services, engineering, energy and oil and gas. Since its inception in 1974 PICO Group has achieved steady growth and established each of its of businesses as a market leader in its respective sector.

With 18 fully-owned companies, the Group has created thousands of job opportunities for Egyptian nationals and is actively engaged in high-growth sectors of the Egyptian economy.

Each company within the PICO Group is fully independent, highly technical and specialized, each with its own requirements, management team, financial structure, growth path and focus for value creation. The Group aims to expand regionally by applying the experience gained through its successful platform in Egypt, with a focus on its four prima-ry sectors of Agriculture, Consumer Foods, Energy and Real Estate.

PICO Group’s emphasis on strong management and measured growth has given us the competitive advan-tage we need to succeed under volatile market conditions.

Seven Independent, Specialized, Success-ful Companies

• A leading agricultural company in Egypt, PICO Agriculture is fully vertically-integrated, completing the agricultural value chain from propagation to cultivation to export.

• Land Bank: 7,000 acres.• Farms: Owns and operates five

farms in three locations in Egypt.• Technical Know-How: State-

• The largest pastry producer in Egypt, La Poire has two distinct lines of business: production and distribution.

• Retail Branches: 110 total.• Daily Transactions: 12,000-

• PICO Real Estate is a thriving real estate developer with one of the largest real estate portfolios in the Greater Cairo Area.

• Land Bank: +20 million sqm.

• PICO International Petroleum is an independent exploration and production company. The

• PICO Energy Group is a lead-ing petroleum services provider in the Egyptian market.

• PICO Engineering Group is a leading player in the trading of machinery and heavy equipment

• PICO Investments is a private equity investment firm that tar-

PICO Agriculture

La Poire

PICO Real Estate

PICO International Petroleum

PICO Energy Group

PICO Engineering Group

PICO Investments

of-the-art tissue culture lab; plant nursery covering complete propagation cycle.

• Export Markets: UK, Holland, Germany, Denmark, Italy, France, Russia, Malaysia, Singapore, Africa, the Gulf, the Levant.

• Quality Assurance Accredita-tions: Tesco Natures Choice (TNC), Global Gap, British Retail Consortium (BRC), Field to Fork, LEAF, Ethical Trading Initiative.

• Employees: 1,300 full-time; up to 2,500 additional farm labor as needed for peak activities.

15,000, excluding LP Express.• Key Differentiators: Supply

chain management stretches from the factory through the distribution network to the end-consumer.

• Factory: Innovative layout over 2,000 sqm; plans to double floor-plan.

• Employees: 1,500 full-time in the factory.

• Areas of Operations: Office Facilities, Agricultural Land, Residential Real Estate Projects.

• Locations: Zamalek, Korba, Mohandessin, Maadi, New Giza, City View, Orange Lake, Mansouryia.

• Clients/Strategic Partnerships: El Ein Valley, City View, New Giza, Beano’s, Weatherford, Amex, Citigroup, Beltone.

company focuses on revitalizing and optimizing production at small and medium-sized mature fields, where its interests span the range of oil and gas upstream activity — from near field exploration to full field development planning and operations.

• Our Fields: Amal, Geisum and Tawila, Gemsa, Zaafarana, Horus (East Alamein), South Ramadan Marine.

• Portfolio of services: Petroleum Services, Petroleum Integrated Services, Technology, Energy Solutions, Logistics Services, Mar-ine Services, Research & Analysis.

• Experience: Nearly 40 years.• Certifications: ISO 9001-2000,

ISO 14011-2004, OHSAS 18001-2007.

via three independent engineer-ing companies.

• Sectors: Industrial, Contracting, Engineering.

• Key Clients and Strategic Partners: Sumitomo Machinery Corporation of America, Link-Belt Construction Equipment, Rhewum, Lintec, Orteco, Alcobex, Flowserve, AUBEMA, Unigrind, Ingersoll-Rand, CASE, Hyster.

gets key sectors of the Egyptian economy.

• AUM: USD 50 million.• Key Sectors: Financial Services,

Banking, Listed Securities, Tourism, Food Industry, Real Estate.

annual report - pico group

Documents