FOR IMMEDIATE RELEASE
25
January
2024
CAPRICORN ENERGY PLC
("Capricorn" or "the Company")
Pre-close
update
In advance of announcing its
full-year results for the year to 31 December 2023 on 14 March
2024, Capricorn provides the following update on operations and
trading performance together with guidance for 2024. This
information is unaudited and subject to further review.
Randy Neely, Chief Executive, Capricorn PLC
said:
"Capricorn enters 2024 having made significant progress on the
key commitments set out in our strategic review: returning
significant funds to shareholders, right-sizing the
organisation, exiting non-core
businesses and maximising the value of the Company's remaining
assets.
We
continue to work to maximise the potential of
our assets in Egypt, focusing on production optimisation and
development opportunities to provide the best returns, and on
deepening our relationships with our Partner, EGPC and the Egyptian
Government. However, the pace at which this can be achieved must
reflect the availability of funds generated in
country.
We
successfully amended our UK North Sea contingent payment
arrangement late in the year with Waldorf Production UK, resulting
in the key achievements of accelerated cash receipts and the
acquisition of a cash flow generative non-operated asset in the UK
Central North Sea.
Following the year end we also added deep financial and
operational talent to our executive team with the appointment this
month of Geoff Probert as COO, and Eddie Ok, who has agreed to take
up the role of CFO."
Corporate and Finance Highlights
Ø Financial
performance for the year ended 31 December 2023
o Revenues of $202m; provisional entitlement sales volumes of
4.4 mmboe (47% liquids), production costs of $59m ($5.4/boe) with
average oil price of $85.3boe and gas price of
$2.95/mmscf
o Capex of ~$120m
o Net
cash outflows of $5m from Egypt operations, post capex
o Group net cash of $76m; comprising $190m cash and $114m
debt
o Receivables of $173m after expected credit loss
adjustments
o Gross G&A of ~$70m inclusive of restructuring
costs
Ø Delivery
on our shareholder return commitment set out in the strategic
review, with $550m paid to shareholders in 2023
Ø Solid
progress with ongoing $25m share buyback programme with ~$18m
repurchased at the end of 2023. Pace of the buyback is limited by
reduced trading volumes
Ø $48m
payment received in December in settlement of UK contingent payment
with a further $24.5m to be received over the next 12
months
Ø Confirmation of Senegal FPSO sailing late December, an
important milestone with respect to Capricorn's potential
entitlement to a contingent payment of between US$25m and US$50m if
first oil is achieved in the first half of 2024 and the average
Brent oil price during the first six months of production exceeds
the $55/bbl or $60/bbl thresholds contained in the sale and
purchase agreement
Ø $240k
($100k from Capricorn) social investment programme delivered in
partnership with EGPC, the Al Orman Association and supported by
the Egyptian Ministry
Ø MSCI
classification upgraded from AA to AAA status
Ø Exited
legacy non-core exploration positions in Mauritania, Mexico and
Suriname
Operational update
Ø FY 2023 WI
Production of 30,222 boepd (47% liquids)
Ø Teen and
Badr El Din (BED) LLP projects are now complete and beginning to
ramp up
Outlook
Ø Capricorn
is working with its Partner in Egypt to ensure the appropriate
scale of rig fleet is deployed to enable effective
exploitation of the asset base, in alignment with our
strategic review commitments. At this time, drilling activity in
Egypt is expected to be lower in 2024. This will support the
delivery of the most efficient drilling campaign
to optimise reservoir management and better align capital
activity to accessible funds generated in country. While timing
uncertainty around collections continues, the Company is managing
its Egyptian business obligations and expects to collect the amount
outstanding in full
Ø Once there
is clarity around availability of funds in country, Capricorn will
be able to provide an approved budget to define its 2024 capex,
opex and production guidance. In the absence of development
drilling, average production is expected to decline by 20-30% over
the year
Ø The
Company is currently committed to spend ~ $10m in 2024 comprising
up to five non-operated exploration wells, including activity to
de-risk the potentially extensive Abu Roash F unconventional
play. At this time the Company intends to seek at least a
partial deferment of these expenditures into 2025 from
EGPC
Ø Capricorn
expects to complete acquisition of 25% WI in the Columbus gas
condensate field in Q1/24
Ø The
Company is currently seeking to defer amounts due under its
remaining obligations on the acquisition of its Egyptian
assets
Egypt Production
WI production in 2023 across the
four main concession areas of Obaiyed (Capricorn 50% WI), BED
(Capricorn 50% WI), North East Abu Gharadig (Capricorn 26% WI) and
Alam El Shawish West (Capricorn 20% WI) averaged 30,222 boepd (47%
oil) for the year. As previously disclosed, this was below the low
end of the original FY23 32-36,000 boepd guidance, largely impacted
by the timing of the delivery of key projects at Teen and in the
BED area, along with lower than expected contributions from new
wells.
Drilling activity at the end of 2023
was focused on the Abu Roash reservoir targets in the Badr El Din
concession, where continued step-out and delineation wells have
seen positive results. In both the BED15 and BEDC6 fields we saw
reservoir net pay outcomes at the higher end of expectations, also
extending the limit of the fields. Incremental step-out drilling on
these fields is an area of success for Capricorn since acquisition.
These wells will now be tested ahead of coming online in Q1/24.
Results will now be integrated into field models to inform future
development activity.
A number of facilities projects were
completed towards the end of 2023 at BED, Teen and Karam. These
projects focused on optimising gas production with compression and
low-pressure production optimisation, with production impact to be
assessed in Q1/24. There are no major projects planned in
2024.
Egypt Exploration
Capricorn has a non-operated
participation in three exploration concessions in the Western
Desert. The Company is working with its Partner to negotiate
with EGPC an extension to the concession timeline, allowing a
partial deferment of some of this exploration activity into at
least 2025.
Notwithstanding the intent to seek a
partial deferment, once the Company has clarity on the availability
of funds from Egypt operations in 2024, exploration activity is
expected to include: i) up to three wells in the West El Fayoum
(WEF) concession in H1/24 to meet the original minimum work
obligation; ii) a work programme to de-risk and develop our
understanding of the emerging unconventional Abu Roash F formation;
iii) a well in the South East Horus concession targeting the
Rizk NW opportunity, a structure offset from an existing field; and
iv) drilling activity commencing towards the end of 2024 in
the North Um Baraka concession, where there is a two well commitment. Prospect
selection will follow the receipt of 3D seismic data in early
2024.
UK
North Sea Contingent Payment Settlement
In Q1/24, Capricorn expects to
complete its acquisition of Waldorf's 25% non-operated WI in the
Columbus gas field located in the UK Central North Sea. The
interest will be transferred into an existing Capricorn UK
subsidiary and should deliver consistent cash flows from a 1
January 2024 effective date, with approximately 80% of production exposed to the UK gas
price. In addition, the acquisition of the Columbus field
allows the Company to maintain its presence in the UK North Sea
where it has been active over the last decade through continuous
exploration and production activities. As part of the settlement,
Capricorn received $48m in December with a further $24.5m to be
paid over the next 12 months. The Company continues to explore ways
of creating value for shareholders in the UK North Sea.
Senegalese Tax Authority Notice Update
Further to our announcement of 15
November 2023, the Senegalese Tax Authority has now agreed that
real estate capital gains tax ($14.5m including interest and
penalties originally claimed) was not due on the sale of our
interests to Woodside Energy. However, the tax process is ongoing
with respect to the matter of Senegalese registration duty ($29.3m
including interest and penalties). Capricorn's position remains
that no Senegalese registration duty is payable, based on analysis
at the time of the transaction, and will continue to vigorously
defend its position on this matter.
CFO
& COO Appointment
We have recently strengthened the
executive team in 2024 by welcoming our new Chief Operating
Officer, Geoff Probert and Chief Financial Officer, Edward Ok.
These appointments bring deep industry experience and strong
relationships in Egypt, coupled with strategic, financial and
operational leadership to drive the delivery of profitable growth
as the business evolves.
Ends
Enquiries to:
Analysts / Investors
|
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Nathan Piper, Commercial
Director
|
Tel: 0131 475 3000
|
|
|
Media
|
|
Diana Milford, Corporate
Affairs
|
Tel: 0131 475 3000
|
|
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Billy Clegg/Owen Roberts,
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
Glossary
boe
barrels of oil equivalent
boepd
barrels of oil equivalent per day
bbl
barrel of oil
FPSO
floating production storage and offloading vessel
k
thousand
LLP
low low pressure
m
million
mmboe
million barrels of oil equivalent
mmscf
million standard cubic feet
WI
working interest
All
Financial figures are unaudited and displayed in US
dollars.