REG - Capricorn Energy PLC - PSC Consolidation Agreed

Capricorn EnergyAnnouncement

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RNS Number : 7829H  Capricorn Energy PLC  08 May 2025

FOR IMMEDIATE RELEASE                                                                                                 8 May 2025

 

 

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

 

Agreement reached to consolidate, extend and improve Western Desert
concessions

 

Capricorn announces that it has been informed by the Egyptian General
Petroleum Corporation ("EGPC") that it has approved the consolidation of eight
of the Company's existing Egyptian concession agreements, in which it has a
50% participating interest held jointly with Cheiron Oil and Gas Limited
("Cheiron" or "the Operator"), into a new, single integrated concession
agreement. The integrated concession agreement is subject to Egyptian
Parliamentary ratification which is expected to take place in 2025.

 

The new concession agreement includes improved commercial terms 1  (#_ftn1)
and a refreshed primary development term to support increased investment, for
the benefit of all parties.

 

Key elements of the merged concession

·     The Badr El Din (BED), Obaiyed, North Alam El Shawish, North
Matruh, Sitra, BED 3, and BED 2 and BED 17 development concessions, along with
the North Um Baraka exploration concession, will be consolidated into a single
integrated concession providing up to a 20-year life through an initial
10-year term, plus two five-year extensions for the development areas.

·      Improved fiscal terms to promote increased production of both oil
and gas through investment, including:

o  profit share 2  (#_ftn2) of 27-29%,

o  a merged single cost pool,

o  40% cost recovery over four years, and

o  excess cost recovery of 20%.

·   An improved gas price of $4.25/mmbtu for incremental gas produced from
existing fields and new discoveries agreed to promote increased gas
production.

·      Four additional blocks will be incorporated into the BED 17
development area.

·     The direct award of two open exploration areas adjacent to
existing acreage will be added to the integrated concession which will require
the drilling of 11 gross exploration wells.

·     These integrated concession improvements are expected to increase
internally estimated working interest (WI) unrisked best estimate contingent
resources volume to 332 mmboe, of which up to approximately 20 mmboe, subject
to risking and external audit, are expected to convert to 2P reserves post
ratification, with further incremental conversions expected at year end and
during our annual reserves reviews going forward.

·   In exchange, post-ratification, for its 50% WI share in the integrated
concession the Company will pay EGPC a signature bonus of $10m, with two
further bonus payments of $5m on the first and second anniversaries of the
signature date (total $20m). These bonuses are expected to be paid through the
Company's receivables balance with EGPC.

·      A commitment to implement a predominantly drilling-based work
program in the first five years amounting to ~$100m, WI share.

·     In addition to costs incurred under the new integrated concession,
the Company has the right to recover 70% of the carried forward cost pool
balance transferred from the original concessions, plus 100% of any
unrecovered costs transferred from the original concessions and amortised as
per the relevant original concession agreement.

 

Randy Neely, Chief Executive, Capricorn Energy PLC said: "This agreement marks
a key milestone in unlocking further value in our Egyptian Western Desert
asset base.  The three partners: EGPC, Cheiron and Capricorn have put in
significant time and effort to construct a business case that allows all
parties to benefit. With the improved terms and consolidation of the
development leases, the joint venture partners will be able to justify
increased investment to unlock significant contingent resources, leading to
increased production and reserves for the benefit of all stakeholders.  The
development potential of these assets is fully capable of being funded by
cashflows generated in Egypt.

 

With the successful outcome of this milestone in sight, we, along with our
partners, will now begin the work to achieve a similar outcome for the Alam El
Shawish West (AESW) joint venture.

 

We believe this agreement is a very important step in restoring Capricorn as a
premier small-cap energy company. In addition to our achievements in Egypt, we
continue to actively evaluate material opportunities in the UK North Sea.
Combined, these initiatives will make Capricorn significantly more sustainable
as a business and attractive as an energy investment."

 

 

Ends

 

Enquiries to:

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

 Media
 Diana Milford, Corporate Affairs                                            Tel: 0131 475 3000

 Georgia Edmonds/ Violet Wilson / Fergus Young, Camarco                      Tel: 0203 757 4980

 

About Capricorn Energy PLC

 

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

 

For more information, visit www.capricornenergy.com
(http://www.capricornenergy.com) .

 

 

 1  (#_ftnref1) Compared to the terms disclosed in the 03 May 2024 analyst
presentation on our website

 2  (#_ftnref2) Based on $60-80/bbl Brent price range, WI liquids production
<15,000 bopd, WI gas production <300mmscf/d

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