Capricorn Energy release 2022 Full Year Results and Strategic Review Update
Strategic review commenced on 1 February 2023
Capital returns: the Board commits to return to shareholders all excess cash flow not required for our go forward core operational focus, resulting in a significant return of capital of approximately US$575m via a c.US$450m special dividend proposed to be paid in May 2023, a further special dividend in Q4 2023 of US$100m dependent upon certain conditions and a share buyback of at least US$25m over the next twelve months
The US$100m special dividend in Q4 2023 is dependent upon a number of factors including: addressing our receivables position in Egypt; the outcome of conversations with stakeholders in Egypt around licence extensions and renegotiation of terms; actual oil and gas price outcomes for the remainder of 2023; and the conclusions of our strategic review as it relates to further cost actions and future investment in our Egypt business
Cost saving programme initiated: identified and actioned initial gross G&A reduction of at least US$35m on a run rate basis; opportunities for further cost savings to be pursued, with costs to be aligned to activity on an ongoing basis to maximise cash
Materially scale back all exploration spend outside Egypt and monetise, farm-down or exit all other exploration positions. A process has commenced for a potential sale of our UK assets
Focusing on maximising value of Egypt by optimising investment, well selection and rig performance, continuing to focus on liquids production growth and, alongside partners, exploring options to enhance fiscal terms
Appointment of new Chief Executive: Randy Neely, former President and CEO of Egypt-focused operator TransGlobe Energy Corporation to join Capricorn on 1 June 2023
Strategic review continues with medium to longer term strategic outcomes to be presented in due course, with a Capital Markets Day to be held in Q4 2023
ESG Highlights
- Net zero by 2040: good progress on decarbonisation pathway, on track for 15% GHG equity emissions reduction by 2025
2022 Financial Highlights
- Working interest Egypt oil and gas production ~34,200 boepd, comprising 42% liquids and within revised guidance of 33,000-36,000 boepd; net entitlement sales volumes 4.7 mmboe
- Revenues from Egypt production US$229m: average realised oil price of US$98.8/bbl and gas price of US$2.9/mcf (average total production cost US$5.7/boe)
- Net cash generated from Egypt oil and gas production US$104m, comprising US$129m net cashflow generated during the year and deferred consideration and settlements paid US$24m
- Tax refund of US$1.06bn in Q1 2022 resulting from Indian tax dispute resolution
- US$529m returned to shareholders in H1 2022 via tender offer and share repurchase programme
- Year-end Group cash and cash equivalents US$757m; net cash US$597m after debt drawn to 31 December 2022 of US$160m
- Egypt trade receivables at 31 December 2022 US$97m
- Earnout consideration on the disposal of the UK Catcher and Kraken interests in relation to 2022 production and oil prices US$137m received in Q1 2023; US$77m production earnout in relation to 2021 production received in H1 2022
- Group capital expenditure on oil and gas assets US$162m
- Operating loss after tax US$160m from continuing operations
- Impairment charge of US$43m on Egypt producing assets
- Non-Egypt unsuccessful exploration costs of US$94m
- Profit of US$109m from discontinued operations from increase in value of earnout from sale of UK producing interests
- Loss after tax of US$51m
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