Capricorn reports strategic progress in 2023

Capricorn Energy said in an update on Thursday that revenue for 2023 totalled $202m, driven by provisional entitlement sales volumes of 4.4 million barrels of oil equivalent, with 47% of those volumes coming from liquid products.

The London-listed firm said production costs for the year totalled $59m, translating to $5.40 per barrel of oil equivalent, with an average oil price realisation of $85.3 per equivalent barrel and a gas price of $2.95 per million standard cubic feet.

Its capital expenditures reached $120m, and its net cash position stood at $76m, consisting of $190m in cash and $114m in debt.

Additionally, Capricorn distributed $550m to shareholders in 2023.

On the operational front, Capricorn said it achieved a working interest (WI) production of 30,222 barrels of oil equivalent per day for the full year, with 47% of the production attributed to liquid products.

The company successfully completed the Teen and Badr El Din (BED) LLP projects, marking important milestones in its operations.

Looking ahead to 2024, Capricorn said it was planning to optimise its drilling activities in Egypt, expecting lower drilling activity to align with its strategic goals, enhance reservoir management, and better allocate capital activity to funds generated in the country.

Despite uncertainties around collections, the company said it was actively managing its Egyptian business obligations and anticipated collecting the outstanding amount in full.

Once the availability of funds in Egypt was clear, Capricorn said it would provide an approved budget defining its 2024 capital expenditures, operating expenditures and production guidance.

In the absence of development drilling, the firm said it foresaw a 20% to 30% decline in average production over the year.

Capricorn said it intended to spend about $10m in 2024, primarily on non-operated exploration wells and de-risking projects, with plans to seek a partial deferment of those expenditures into 2025 from EGPC.

The acquisition of a 25% working interest in the Columbus gas condensate field was expected to be completed in the first quarter.

Additionally, the company said it was actively pursuing deferments for amounts due under its remaining obligations related to the acquisition of its Egyptian assets.

“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,” said chief executive officer Randy Neely.

“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.”

Neely said the company successfully amended its UK North Sea contingent payment arrangement late in the year with Waldorf Production UK, resulting in 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.”

At 0943 GMT, shares in Capricorn Energy were down 0.55% at 144p.

Reporting by Josh White for Sharecast.com.