Capricorn Energy announces $50m special divi alongside results

Capricorn Energy announced plans for a proposed $50m special dividend alongside its full-year results on Thursday.

The company reported revenue of $201m for 2023, driven by an average oil price of $81.2 per barrel and a gas price of $2.9 per million standard cubic feet, while production costs amounted to $60m.

Exploration expenditure totaled $49m, with $15m allocated to Egypt and $34m across its legacy international portfolio.

Additionally, $91m was invested in capex for Egypt's producing assets, resulting in a net cash inflow of $32m from Egypt operations.

Despite a group net cash position of $76m, including $190m in cash and $114m in debt, the company reported an operating loss of $87m from continuing operations and a loss after tax of $144m.

Strategic initiatives included shareholder return commitments, with around $568m paid out in 2023 and a further $50m dividend planned for the second quarter, contingent on shareholder approval.

Operational highlights featured Egypt oil and gas production at 30,044 barrels of oil equivalent per day (boepd), with 47% comprising liquids.

The company drilled 23 additional wells, adding approximately 6,300 barrels of oil per day (bopd) and 16 million standard cubic feet per day (mmscfd).

However, exploration drilling in the first half of 2023 yielded no success.

Looking to 2024, Capricorn said it was committed to aligning investments in Egypt with available funds in the country.

Production was forecast in the range of 20,000 to 24,000 boepd, with 48% expected to be liquids.

Operating costs were projected to remain stable at $7 to $9 per barrel of oil equivalent (boe), influenced by liquids processing volume and absolute production levels.

The company said it aimed to focus on cost reduction, targeting a year-end gross general and administrative expense of less than $20m per year, net of restructuring costs.

Additionally, Capricorn said it intended to seek deferment of some expenditures into 2025 while working to secure concessions and extensions in Egypt to support increased investment and strengthened returns.

Furthermore, Capricorn said it expected to complete the acquisition of a 25% working interest in the Columbus gas condensate field in the second quarter.

The company added that it was actively seeking to defer payments related to its contingent obligations linked to the acquisition of its Egyptian assets.

“In the last year, the renewed board executed multiple strategic initiatives to transform Capricorn - cost reduction programmes, focusing the corporate opportunities portfolio on Egypt and changes to the culture of the business, which we continue to push through,” said chief executive officer Randy Neely.

“Alongside this strategic refresh, the board made returning capital to shareholders a core business objective, returning around $568m in 2023.

“Additionally, I am delighted to announce that we are proposing a $50m special dividend to be paid in the second quarter of 2024, subject to shareholder approval.”

Looking ahead, Neely said the company was actively working with its partner to maximise the potential of its Egyptian portfolio and progress amendments to the PSCs that support increased investment and strengthened returns.

“We are confident that the receivables position will improve in the coming months, supported by the first quarter announcements of the UAE investment deal on the Egyptian north coast and the International Monetary Fund loan, as well as financial support package pledges from the EU and World Bank.

“We are also pleased to announce that Capricorn received payment of $30m from EGPC this week, further demonstrating the improving fiscal landscape.

“By focusing on production and development opportunities to provide sustainable, best in class returns, and deepening our relationships with our Partner and the Egyptian Government, our renewed team will ensure that Capricorn advances confidently and successfully in 2024 and beyond.”

At 0838 GMT, shares in Capricorn Energy were up 3.11% at 172.2p.

Reporting by Josh White for Sharecast.com.