REG - Capricorn Energy PLC - Operational and trading update

Capricorn EnergyAnnouncement

28/01/2025 07:00

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RNS Number : 8458U  Capricorn Energy PLC  28 January 2025

FOR IMMEDIATE RELEASE                                                                                           28 January 2025

 

 

CAPRICORN ENERGY PLC ("Capricorn" or "the Company")

 

Operational and trading update

 

 

In advance of announcing its 2024 full year results and 2025 guidance on 27
March 2025, Capricorn provides the following update on operations and trading
performance. This information is unaudited and subject to further review.

 

Randy Neely, Chief Executive, Capricorn PLC said:

"I am delighted to report that our continued focus on financial and
operational discipline in 2024 resulted in Capricorn achieving the top end of
production guidance and a return to profitability. Throughout the year, we
kept the market abreast of Woodside's progress with the Sangomar asset and
were very pleased to confirm the receipt of $50m on 22 January. As previously
guided, the Company remains committed to returning any available proceeds of
this contingent payment to our shareholders, the precise amount and timing of
which remains subject to any disputed tax obligations.

 

In 2025, we will continue to focus on maximising the value from our
self-funding Egyptian business unit, ensuring revenues from the assets provide
the cash flow to sustain and eventually grow investment in country. Our
ongoing negotiations to amend, extend and consolidate the terms of our
production sharing contracts (PSCs) to support increased investment and
strengthened returns continue to progress well and we expect this process to
complete within the timeline guided in September 2024.

 

Outside of Egypt, our priority is to develop the scale and longevity of the
business to increase cash flows and deliver consistent shareholder returns.
Our objective is to diversify and expand operations by leveraging our core
corporate capabilities to identify, acquire and exploit the right assets in
the right locations. We are currently evaluating M&A opportunities in the
UK North Sea and in the MENA region against a strict set of strategic,
financial and returns criteria, and look forward to updating the market on our
efforts when appropriate."

 

Corporate and Finance highlights

Ø Financial performance for the year ended 31 December 2024:

·     Revenues of $143m; provisional entitlement sales volumes of
3.5mmboe (39% liquids), production costs of $41m ($4.6/boe) with average oil
price of $79.3boe and gas price of $2.94/mmscf

·     Capex of ~$60m

·     Group net cash of $23m; comprising $123m cash and $100m debt
following receipt of payments in Egypt of $135m

·      Net cash inflows of $72m from Egypt operations, post capex

·      Receivables of ~$180m before expected credit loss adjustments

·    Gross G&A of ~$25m, inclusive of ~$3m in legacy restructuring
costs but excluding share-based payments

·     $25m share buyback completed in November 2024

Ø   Senegal contingent payment of $50m from Woodside received on 22 January
2025. The precise amount and timing of distribution remains subject to any
disputed tax obligations in Senegal

 

Operational update

Ø    FY 2024 WI Production of 23,739 boepd (44% liquids)

Ø    Development drilling continued through the latter part of 2024 with a
remaining focus on the Abu Roash G (ARG) reservoir development and management
in the Badr El Din (BED) area

Ø    Exploration drilling will commence in Q1 2025 with a sequence of
wells drilled on the South East Horus (SEH), West El Fayoum (WEF) and North Um
Baraka (NUMB) concessions, fulfilling outstanding exploration commitments

 

Outlook

Ø    Capricorn continues to work with its partner Cheiron to progress
negotiations with the Egyptian General Petroleum Corporation towards an
improved PSC on those concessions held 50:50. The Alam El Shawish West (AESW)
joint venture will also be pursuing improvement in the concession terms in
2025

Ø    Continue to evaluate M&A opportunities in the UK North Sea and
MENA region to diversify and expand our operations

 

Egypt Production

WI production in 2024 across the four main concession areas of Obaiyed
(Capricorn 50% WI), BED (Capricorn 50% WI), North East Abu Gharadig (Capricorn
26% WI) and AESW (Capricorn 20% WI) averaged 23,739 boepd (44% oil) for the
year, at the upper end of the guidance range for WI production of 20,000 -
24,000 boepd.

 

Over the year Capricorn focused on improving knowledge of and optimising the
producing assets in Egypt with the goal of establishing a more predictable
operations base.  Working with our operating partner Cheiron, the Company
prioritised liquid-focused operations in the BED area and efforts continue to
actively manage reservoirs with water injection, to add production and
reserves. Cash receipts totalled $135m during the year across all concessions.

 

Development drilling activity is planned to continue in 2025 with a
continuation of the strategy that has been taken at BED. In addition, wells
will be drilled on the AESW concession, targeting the ARG reservoir. Workovers
are an important, cost-efficient mechanism to maintain production and
Capricorn will continue to proactively high-grade opportunities, supporting
the Operator in prioritising economic projects.

 

Egypt Exploration

Exploration drilling will resume in Q1 2025 with a work programme to fulfil
the outstanding commitments on the WEF, SEH and NUMB concessions. The Operator
is planning up to six exploration wells in total. The first of these will
commence in February with the WEF-1X well. In addition to targeting several
conventional objectives the well will also test the emerging Abu Roash
unconventional play.

 

Senegal tax dispute

The tax dispute related to Capricorn's disposal of its interest in the
Sangomar Field is ongoing. The Government of Senegal continues to argue that
registration duties and capital gains tax were applicable to this transaction.
Woodside, as recipient of the tax assessment, has filed an action with the
High Court of Dakar with the next hearing taking place in February 2025.
Woodside is also considering its position under international treaties in
relation to this matter. Capricorn's position remains that these taxes were
not applicable as the transaction took place prior to production commencing on
the project. Payment of $50m from Woodside was received on 22 January 2025.
The precise amount and timing of any Senegal-related distribution remains
subject to appropriate provisioning for the ongoing tax process.

 

UK North Sea contingent payment update

Capricorn continues to evaluate options to recover the defaulted final
settlement payment of $22.5m payable by Waldorf on 3 January 2025 (which
increases to $29.5m if the Columbus acquisition does not complete by end Q1
2025). Capricorn is currently in discussions with Waldorf's secured
creditors.

All figures are unaudited and displayed in US dollars.

 

Ends

 

 

 

Enquiries to:

 Analysts / Investors
 Nathan Piper, Commercial Director                                           Tel: 0131 475 3000

 Media
 Diana Milford, Corporate Affairs                                            Tel: 0131 475 3000

 Billy Clegg / Georgia Edmonds, Camarco                                      Tel: 0203 757 4980

 

 

 

 

 

Capricorn Energy

Capricorn is an Egypt-focused energy producer, with an attractive portfolio of
onshore exploration, development and production assets in the Western Desert.

 

For more information on Capricorn visit: https://www.capricornenergy.com
(https://www.capricornenergy.com)

 

Glossary

boe                         barrels of oil equivalent

boepd                     barrels of oil equivalent per day

G&A                        general and
administrative expenses

m                            million

MENA                     Middle East and North Africa

mmboe                   million barrels of oil equivalent

mmscf                    million standard cubic feet

WI                           working interest

 

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