TIDMCNE
RNS Number : 4440Z
Capricorn Energy PLC
25 January 2022
FOR IMMEDIATE RELEASE 25 January 2022
CAPRICORN ENERGY PLC ("Capricorn" or "the Company")
Operational and Trading Update
Ahead of announcing its preliminary results for the year to 31
December 2021 on 8 March 2022, Capricorn today provides an update
on its operations and trading performance together with guidance
for 2022. This information is unaudited and subject to further
review.
Simon Thomson, Chief Executive, Capricorn Energy PLC said:
"We are very encouraged by the initial operating performance of
our newly acquired Western Desert Assets in Egypt, with production
growth ahead of expectations. We look forward to accelerating cash
flows from the assets whilst reducing their emissions profile.
We are actively pursuing opportunities to grow our producing
asset base within our strict capital allocation criteria.
With balance sheet strength and financial flexibility, Capricorn
enters 2022 positioned to make another significant capital return
to shareholders with the company having concluded all required
steps to enable payment of the India tax refund."
Production Highlights
Egypt
Ø 2021 production following completion of the acquisition in
September, averaged 36,300 boepd net to Capricorn's working
interest (WI)
Ø Production from the Egyptian assets increased 8% during the
period from completion of the acquisition to 31 December 2021
Ø 2022 Capricorn WI production is anticipated to average
37,000-43,000 boepd with production growing throughout the year and
2022 exit rates forecast to exceed the top end of guidance
range
o Oil and condensate are expected to comprise 35-40% of the
production mix in 2022, with an increased focus on liquids rich
opportunities
o Production costs are forecast to be US$4.5 - US$5.5 per
boe
UK
Ø Earn-out consideration on the disposal of the UK Catcher and
Kraken interests in relation to 2021 production and oil prices will
be US$76m, payable in Q2 2022. Uncapped further earn-out
consideration will be payable in respect of calendar years 2022 to
2025, based on meeting minimum production volumes and average oil
prices.
Tax refund from Government of India
The Company has concluded a ll necessary steps under the rules
of the India Taxation (Amendment) Act 2021 required for payment by
the Government of India of a tax refund of approximately INR 79bn
(US$1.06bn). Payment is expected to be made in early 2022.
Corporate and Finance Highlights
Ø Group net cash at year end was US$133m, comprising US$314m
cash and US$181m debt drawn to fund the Egypt acquisition
Ø Special dividend of US$257m paid following completion of
Senegal sale
Ø Net cash outflow in year of US$133m on acquisition of Egypt
with a further US$21m to be settled in Q1 2022
Ø Oil and gas revenue in Egypt from acquisition completion on 23
September to 31 December was US$56m, from net entitlement
production of 1.5 mmboe of which 38% was liquids. Oil sales
averaged US$77.5/boe and gas sales averaged US$2.9/mcf. Production
costs over the period were US$22m, or US$6/boe (on a WI basis)
Ø Group capital expenditure on continuing operations during the
year was US$75m, below guidance, including US$20m post acquisition
expenditure in Egypt
Ø Net cash inflow from UK producing assets of US$296m,
comprising US$213m net cashflow generated during the year, US$53m
received on completion of sale and US$30m realised on sale of bonds
issued by the purchaser as consideration
Ø Cash outflows in respect of capital activity totalled US$65m
(producing assets US$25m, exploration and appraisal activities
US$40m)
Ø Current estimates of 2022 capital expenditure total
approximately US$200m, including:
o Egypt production and development expenditure of US$90-110m
targeted at delivering substantial production growth during
2022
o Egypt exploration expenditure of US$30-35m to sustain the
resource base over time
o UK infrastructure-led exploration expenditure of US$40m,
predominantly on the Jaws and Diadem wells, with no further well
commitments beyond 2022
o Other international exploration of US$30-35m, principally in
Mexico, with no further commitments beyond 2022 and any further
investment contingent on farm-downs
Planned return of capital to shareholders
With the tax refund from the Government of India due and active
management of the asset portfolio in recent years, Capricorn is
well positioned to continue delivery of its differentiated business
model of returning value to shareholders whilst building
sustainable cashflow generation and growth. As previously
announced, Capricorn plans to return up to US$700 million of the
India tax refund proceeds to shareholders. Having consulted with
shareholders on the capital return options, Capricorn has
determined that, to provide flexibility to its shareholders,
US$500m will be returned by way of tender offer, whereby
shareholders will be invited to tender some or all of their
shareholding for purchase on terms that will be set out in a
Circular to be posted to shareholders. It is intended that the
remaining sum of up to US$200m will be returned by way of an
ongoing share repurchase programme to provide a continuing
value-accretive return of capital to shareholders. Each of these
returns is subject to shareholder approval.
On 15 November, it was announced that the Company would commence
a buyback programme of an initial amount of up to GBP20m out of the
planned US$200m programme. This was due to end on 31 January 2022
and has now been extended to run until the end of February
2022.
Production
Egypt
Working interest production across the four main concession
areas of Obaiyed (Capricorn 50% WI), Badr El Din (Capricorn 50%
WI), North East Abu Gharadig (Capricorn 26% WI) and Alam El Shawish
West (Capricorn 20% WI) averaged 36,300 boepd during the period
from acquisition completion on 23 September to year end 2021, with
38% of the production mix comprising oil and condensate. This was
within the guidance range for WI production of 33,000-38,000 boepd
announced in March 2021.
Across the operations, a full assessment of emissions reduction
opportunities is being developed. As well as agreement to undertake
an emissions baseline study and reduction strategy, several
decarbonisation projects are already underway including gas
replacement for diesel, centralisation of power and
electrification. The application of renewable power in-field is
under consideration and good progress is being made on identifying
flare reduction opportunities.
During H1 2022, an additional three drilling rigs are expected
to be contracted to further support early production ramp-up
activities. The first of these additional rigs is undergoing
acceptance and is in the field preparing for operations. Up to 40
new production or injection wells are scheduled for drilling and
completion in 2022, with a number of field extension well
opportunities also identified.
UK North Sea
Capricorn announced completion of the sale of its UK North Sea
production interests to Waldorf Production in November 2021.
Estimated 2021 annual production from these interests was
approximately 18,300 bopd, towards the upper end of our original
guidance of 16,000 - 19,000 bopd. Under earn-out provisions, based
on 2021 production levels and average oil prices, a payment of
US$76m is due to be made by Waldorf to Capricorn in Q2 2022.
Uncapped further earn-out consideration will be payable in
respect of calendar years 2022 to 2025, based on meeting minimum
production volumes and average oil prices.
Exploration
In Egypt, the prospect portfolio has been matured with drilling
targets identified. The first of three Capricorn-operated wells
(Capricorn 50% WI) to be drilled in 2022 is expected to be in the
South Abu Sennan concession, commencing in H2 2022.
In Mexico, Block 10 (Capricorn 15% WI) operations were completed
in Q4 2021 on the Eni-operated Saasken-2DEL appraisal well. The
well has been temporarily plugged and abandoned with the acquired
data being evaluated as part of the ongoing Saasken Evaluation
Programme. The Eni-operated Yatzil exploration well in Block 7
Offshore Mexico (Capricorn 30% WI) is planned for H2 2022.
In the UK, the Jaws exploration well (Capricorn 50% WI) spudded
in November 2021. Drilling operations continue with well results
expected later in Q1 2022. In the Southern North Sea, the
acquisition of 3D seismic data over licence P2428 (60% Capricorn
WI) has concluded. Final processed data due in Q2 2022 will enable
Capricorn and its JV partner Deltic Energy to fast-track an
assessment of prospectivity in the licence area.
In addition, preparations continue on the Capricorn operated
licence P2379 (Capricorn 50% WI) targeting drilling of the Diadem
exploration well in Q2 2022.
Enquiries to :
Analysts / Investors
David Nisbet, Corporate Affairs Tel: 0131
475 3000
Media
Jonathan Milne/Linda Bain, Corporate Affairs Tel: 0131
475 3000
Patrick Handley, David Litterick Tel: 0207
Brunswick Group LLP 404 5959
About Capricorn Energy PLC
Capricorn Energy PLC is one of Europe's leading independent
upstream energy companies, headquartered in Edinburgh, UK.
Historically we have discovered, developed and produced oil and gas
in multiple settings throughout the world. Today our focus is on
growing our current gas and liquids production base through
development and exploration, with an ambition to use our strong
balance sheet to expand that production base into other attractive
markets and to commercialise exploration resources. We adhere to
high sustainability standards, we invest to ensure our portfolio
remains competitive through stringent energy transition scenarios
and we are committed to net zero carbon emissions by 2040.
For further information on Capricorn please see:
www.capricornenergy.com
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