TIDMCNE
RNS Number : 3451Y
Capricorn Energy PLC
06 September 2022
6 September 2022
CAPRICORN ENERGY PLC ("Capricorn" or "the Company")
Half-Year Report Announcement
Simon Thomson, Chief Executive, Capricorn Energy PLC said:
"Almost one year since the acquisition of the Egypt business, we
continue to make good progress and have been successful in
prioritising oil and liquids production growth while current
commodity prices remain high.
We were delighted to return more than US$500 million to
shareholders following receipt of the India tax refund at the
beginning of the year.
The Board continues to believe that the proposed merger with
Tullow can deliver significant long-term value for shareholders
through creating a leading, Africa-focused energy company. The
Board is also mindful of the impact of external factors and market
conditions and is, as always, assessing all options to maximise
value for shareholders. The company is exploring a number of
expressions of interest relating to alternative transactions, and
is engaging with those parties expressing interest to evaluate
potential outcomes."
H1 2022 Operational and Strategic Highlights
Ø Egypt H1 2022 Capricorn working interest production averaged 35,500 boepd
Ø 14,600 bopd liquids (up 6% from 2021 post acquisition
average)
Ø 117mmscf/d gas (down 7% from 2021 post acquisition
average)
Ø Focus on liquids production in prevailing oil price
environment; currently 41% of production
Ø Balance sheet: Group net cash at end of H1, US$631m,
comprising US$809m cash and US$178m debt
Ø Capital expenditure of US$82m during H1
Ø US$77m of earn out consideration received in H1 in relation to
the sale of the UK North Sea producing assets
Ø Receipt of India tax refund of US$1.06bn, enabling further
shareholder returns with a US$500m tender offer and US$25m share
buyback (which completed in July)
Ø Safe and responsible operations - zero LTIs and zero Tier 1
process Events at BED or Obaiyed in H1
Ø Proposed all-share combination of Capricorn and Tullow Oil
plc, creating a leading African energy company
Outlook
Ø Full year forecast net capital expenditure of US$175-195m;
Ø Egypt Development & Production US$80-90m
Ø Egypt Exploration & Appraisal US$20-25m and International
Exploration US$75-80m
Ø Revised full year production guidance of 33,000 boepd to
36,000 boepd (previous guidance 37,000 boepd to 43,000 boepd)
Ø Egypt Production - a ramp-up in H2 2022 drilling activity is
underway following initial delays of
the fourth and fifth rigs into Egypt and completion of BED compression project by year end
Ø Acquisition of 3D seismic programmes in Southeast Horus and
West El Fayum concessions, Egypt
Ø Initiation of operated exploration drilling in South Abu Sennan, Egypt
Ø Drilling of the Yatzil prospect on Block 7 Mexico expected to commence in Q4 2022
Ø Clear pathway to net zero by 2040 - comprehensive GHG baseline
survey to be completed for Egypt by year end
Ø Documentation on proposed merger expected to be issued in Q4
2022 ahead of a shareholder meeting
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, Brunswick Group LLP Tel: 0207 404 5959
Presentation
The results presentation slides will be available on the website
from 7:00am BST.
Conference call
You can listen to the results presentation by dialling in to a
conference call at 9am BST using the below dial-in-details.
Analysts who wish to ask a question should use the conference call
facility.
Dial-in Details :
United Kingdom (Local): +44 (0)330 165 4012
Access code: 5622049
Webcast
There will be a live audio webcast of the results presentation
available to view on the website ( www.capricornenergy.com ) at 9am
BST. This can be accessed on PC, Mac, iPad, iPhone, and Android
mobile devices.
An 'on demand' version of the webcast will be available on the
website as soon as possible after the event. This can be viewed on
PC, Mac, iPad, iPhone, and Android mobile devices.
Transcript
A transcript of the results presentation will be available on
the website as soon as possible after the event.
Corporate Overview
In Q1, Capricorn received a tax refund from the Government of
India of US$1.06bn. This enabled a capital return to shareholders
via a US$500m tender offer and an additional US$25m share buyback
programme, completed in July 2022.
The strengthened balance sheet allowed the Company to deliver
its strategic focus of securing sustainable short-cycle production
to support cash flow generation. The acquisition of the Egypt
assets last year was a first step in the new growth platform and
met an ambition to operate in regions with strong demand
trends.
We intend to use our balance sheet strength and differentiated
financial flexibility to add further scale to our production base
in the next phase of strategic delivery. The proposed merger with
Tullow Oil is an acceleration of this strategy and presents a
unique opportunity to create a leading African energy company with
a material and diversified asset base and a portfolio of investment
opportunities delivering significant production growth and
sustainable, regular dividends.
Finance Overview
Oil and gas revenue in Egypt in H1 was US$137m, from net
entitlement sales volume of 2.6 mmboe of which 41% was liquids. Oil
sales averaged US$110.9/boe and gas sales averaged US$2.9/mcf.
Production costs over the period were US$33m, or US$5.1/boe (on a
WI basis).
Earn out consideration (including associated interest) of US$77m
was received in H1, under the terms of the Company's disposal of
its UK North Sea producing assets to Waldorf. This payment was
calculated based on an average 2021 Brent price of US$70.91bbl and
production from the divested assets averaging 18,300 bopd. The
forecast FY2022 earn out payment, based on US$100/bbl average Brent
price and production associated with the assets of 15,500 bopd, is
US$136m; this payment would be zero if production from the assets
was below 10,815 bopd.
Current estimates of total 2022 capital expenditure are
US$175-195m, including:
Ø Egypt development expenditure of US$80-90m, targeting liquids production in 2022
Ø Egypt exploration expenditure of US$20-25m to sustain the resource base over time
Ø UK infrastructure-led exploration expenditure of US$45m,
predominantly on the Jaws and Diadem exploration wells with no
further well commitments beyond 2022
Ø Other international exploration of US$30-35m, principally in
UK and Mexico, with no further commitments beyond 2022 and any
further investment contingent on farm-downs
Egypt Production
Capricorn holds interests across four main concession areas:
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).
Ø Egypt H1 2022 Capricorn WI production averaged 35,500 boepd,
with a focus on successfully maximising liquids recovery. This
aggregate production level was lower than expected with fewer wells
brought onstream than originally anticipated, principally as a
result of the six-month delay in delivery and start-up of two
drilling rigs, sourced from outside Egypt
Ø Net liquids (oil and condensate) WI production in Egypt grew
from 2021 post-acquisition levels of 13,870 boepd to 14,600 boepd
in H1 2022
Ø Gas production fell from 2021 post-acquisition levels of 127
mmscf/d to 117 mmscf/d in H1 2022, due to well results at Karam-11
and BTE-4 combined with higher natural decline at the Assil
field.
The JV secured additional rig capacity in Q4 2021 to allow a
ramp-up in investment following completion of the acquisition in
September 2021, in order to take the number of rigs active on the
licences from two to five. The third rig began operations in Q1
2022, delivering three wells in the period. The fourth and fifth
rigs were subject to logistics and commissioning delays. One of
them is now operating on its first well, and the final additional
rig is undergoing commissioning activities and expected to begin
operations before the end of Q3 2022. Consequently, the number of
wells drilled in H1 2022 was lower than originally anticipated, and
the full-year drilling and production outlook is therefore expected
to be lower than planned.
Good progress has been made on the low-pressure compressor
project at the BED-3 facility, where commissioning and start-up is
expected at year end, boosting gas production levels. A similar
project is anticipated to be approved later in the year at the
Obaiyed facility. First gas from the Teen development pilot project
is now anticipated in H1 2023.
Capital expenditure on production and development in Egypt for
2022 is expected to be US$80-90m, which is below prior guidance
taking into account the drilling schedule impact of rig delays and
scheduled timing of first gas from the Teen project.
The greater BED Area electrification project continues and will
provide gas-generated power from a centralised system for
distribution to the BED and AESW concession areas. This reduces
diesel generation, cuts operating costs and GHG emissions and
provides improved power reliability, with the likelihood of
prolonged ESP runtimes in remote well-sites. More than thirty
diesel generators have already been removed from the field.
Exploration
Egypt
The 3D seismic acquisition was safely completed in Q2 2022 in
the non-operated North Um Baraka concession (Capricorn 50% WI),
with further 3D acquisition expected over the Capricorn-operated
concessions from Q3 2022. These high-resolution surveys will
provide significantly improved imaging in prospective areas.
Capricorn will begin drilling operations in our South Abu Sennan
concession (Capricorn 50% WI, Operator) later in 2022.
UK
The Diadem exploration well 22/11b-14 in licence P2379 spudded
in Q2 2022 and reached total depth in Q3 2022 of 51m into the
Triassic at 3754m measured depth. Reservoired hydrocarbons were not
found and operations have begun to permanently plug and abandon the
well.
The Jaws well completed in H1 2022 and was unsuccessful.
Mexico
Following approval of the modified exploration plan and budget,
drilling of the Yatzil prospect on Block 7 (Capricorn 30% WI) is
expected to commence in Q4 2022. This is Capricorn's final
commitment exploration well in Mexico. Capricorn has fully impaired
costs remaining on Block 10 and has also submitted a notice of
relinquishment to the Mexican authorities for Block 15.
Suriname
Capricorn operates Block 61 (100% WI), situated in the
Guyana-Suriname basin where significant discoveries continue to be
made. A plan for acquisition of 3D seismic is being evaluated,
which is the work commitment for the next exploration phase.
Capricorn is progressing in seeking partners to participate in this
next phase.
Israel
Capricorn has a 33.34% WI as Operator in eight licences offshore
Israel. Following seismic processing in order to mature
prospectivity ahead of a drilling decision, Capricorn along with JV
partners, has informed the Ministry of Energy of the intention to
relinquish the licences.
Mauritania
Capricorn has a 90% WI as Operator in Block C7 offshore
Mauritania. The licence has a two-year first exploration period. An
environmental baseline and drilling site survey was completed in Q1
2022 with data gathered to inform a drilling decision ahead of the
next licence phase.
Proposed merger
On 1 June 2022, Capricorn Energy PLC and Tullow Oil plc
announced a proposed merger of equals to create a new company
focused on responsible resource development in Africa.
The combination would create a stronger and more resilient
business, with a pan-African upstream portfolio of material and
diversified producing assets in, Ghana, Egypt, Gabon and Côte
d'Ivoire, along with a portfolio of investment opportunities to
deliver production growth. The new company would be one of the
largest, listed independent African focused energy companies, with
the financial flexibility to invest in and accelerate growth and
will focus on shareholder returns with opportunities for
significant value creation.
Documentation in respect of the court sanctioned scheme of
arrangement is expected to be posted to shareholders in Q4 ahead of
a shareholder meeting, with completion targeted by year end
2022.
The Board continues to believe that the proposed merger with
Tullow can deliver significant long-term value for shareholders
through creating a leading, Africa-focused energy company. The
Board is also mindful of the impact of external factors and market
conditions and is, as always, assessing all options to maximise
value for shareholders. The company is exploring a number of
expressions of interest relating to alternative transactions, and
is engaging with those parties expressing interest to evaluate
potential outcomes.
Principal risks and uncertainties
Managing the Group's key risks and associated opportunities is
essential to Capricorn's long-term success and sustainability. The
Group endeavours to pursue investment opportunities which offer an
appropriate level of return whilst ensuring the level of associated
political, commercial and technical risk remains within the defined
risk appetite of the Group.
The Group's risk management framework provides a systematic
process for the identification and management of the key risks and
opportunities which may affect the delivery of the Group's
strategic objectives. Key Performance Indicators are set annually
and determining the level of risk the Group is willing to accept in
the pursuit of these objectives is a fundamental component of the
Group's risk management framework.
Overall responsibility for the system of risk management and
internal control and reviewing the effectiveness of such systems
rests with the Board. Principal risks, as well as progress against
key risk projects, are reviewed at each Board meeting and at least
once a year the Board undertakes a risk workshop to review the
Group's principal risks. This integrated approach to risk
management has been and continues to be critical to the delivery of
strategic objectives.
Responding to Changing Risks during H2 2022
Capricorn has assessed the risks and uncertainties at the end of
H1 2022 and the principal risks are:
Ø Volatile oil and gas prices
Ø Future challenges and costs to achieving pathway to Net Zero
2040
Ø Reserves downgrade or impairment
Ø Failure to secure business development opportunities
Ø Lack of adherence to health, safety, environment and security
policies
Ø Lack of exploration success
Ø Misalignments with JV operators
Ø Political and fiscal uncertainties
Ø Diminished access to debt markets
Ø Fraud, bribery and corruption
As part of the embedded risk management process, the Group
actively considers emerging risks which could impact on the
business. On 1 June 2022, Capricorn announced that it had reached
agreement with Tullow Oil on the terms of an all-share merger to
create a leading African energy company. This merger will present a
number of risks as well as opportunities for the new company and
these are actively being considered by management.
Financial Review
Key Production Statistics
Half Year Year ended
ended 31 December
30 June 2021
2022
Production - net WI share (boepd) 35,500 36,459
Sales volumes - net EI oil (bblpd) 5,628 5,360
Sales volumes - net gas (mmscfpd) 47,305 51,599
Average price per boe - oil (US$) 110.9 77.8
Average price per mscf 2.9 2.9
Revenue from production (US$m) 137.4 56.2
The average oil price achieved nearing US$111 per boe. Gas price
is essentially fixed under contract to EGPC. Total cost of sales
for the period were US$32.8m, with average production costs of
US$6/boe forecast across the full year.
The depletion charge for the six-month period was US$72.0m,
generating a gross profit of US$32.6m, excluding other income
relating to tax entitlement volumes.
The Group has not currently hedged any production in Egypt but
continues to monitor the position.
Exploration assets
The Capricorn operated Diadem well in the UK North Sea reached
total depth on 29 August and did not find reservoired hydrocarbons.
Costs incurred to 30 June 2022 of US$11.6m have been charged as
unsuccessful costs in the period. The Diadem well followed the
nearby, non-operated Jaws well which was also unsuccessful and
further costs of US$13.5m were also written off in the period.
In Mexico, Capricorn has no further exploration activity
currently planned on Blocks 9 and 10. Previously capitalised costs
of US$24.5m have now been fully impaired. Remaining costs
capitalised at the half year relate to Block 7 where drilling of
the Yatzil well is planned for Q4 2022.
Further exploration costs capitalised at 30 June include
US$35.7m and US$16.4m for licences in Mauritania and Suriname
respectively where Capricorn continues to work toward farming-down
the Group's working interests before committing to exploration
drilling. In Egypt, exploration costs capitalised on US$12.4m
include US$4.4m across the Capricorn operated concessions.
Development assets
Additions in the period in Egypt were US$32.2m, primarily
focussed on the concessions in the Badr El Din area.
Impairment assessment
While the proposed merger with Tullow Oil has no direct impact
on Capricorn's results for the six-month period to 30 June 2022,
the implied value of the Group is less than the current net asset
value carried in the Group balance sheet, providing an indicator of
impairment. Subsequent impairment tests performed across the assets
did not result in any impairment, other than in Mexico for separate
reasons as disclosed.
Net cash inflow for the Period
US$m
Opening net cash at 1 January 2022 132.7
India tax refund 1,056.0
Return of cash to shareholders (528.6)
Net cash inflow from operations 50.2
Earn-out consideration, including interest 77.2
Exploration expenditure (58.4)
Development expenditure (23.2)
Deferred consideration and working capital adjustments
(1) (35.2)
Pre-award costs, new venture activities and carbon
credits (2) (17.2)
Administration expenses, office leases and corporate
assets (14.8)
Net finance costs, equity and other movements (7.4)
Closing net cash at 30 June 2022 631.3
======================================================== ===================
(1) Deferred consideration on Egypt acquisition of US$20.9m and
working capital settlements of US$14.3m on Egypt acquisition and
North Sea asset disposals
(2) Cash outflows on new venture activities of US$3.6m not
relating to pre-award activities are reallocated from
administration costs. Costs of carbon credits of US$7.0m are
included within expenditure on property, plant & equipment and
intangibles within the statutory cash flow.
Reconciliation of statutory cash flow to non-GAAP cash inflow
from operations:
US$m
Operating cash flow per statutory cash flow statement 19.1
Non-GAAP Adjustments:
Administrative costs reallocated 9.8
Pre-award and new venture costs reallocated 10.2
Working capital settlements 11.1
Net cash inflow from operations 50.2
======================================================= =====
Capricorn held cash balances of US$809.0m at 30 June 2022.
Combined with borrowings relating to the acquisition of the Egypt
business of US$177.7m, exclusive of borrowing costs, this led to a
net cash position of US$631.3m at the balance sheet date,
representing a net cash inflow of US$498.6m over the period.
Settlement of the US$1.06bn India Tax refund allowed the Group to
return US$528.6m to shareholders by way of a tender offer and share
buy-back programme. Earn out consideration was received on the sale
of UK assets of US$77.2m and Capricorn settled US$20.9m relating to
the Egypt business combination with further working capital
adjustments of US$14.3m relating to prior year transactions.
Operating cash flows from the Egypt operations were US$50.2m.
Exploration expenditure of US$58.4m in the period includes
US$27.3m of UK exploration costs, mostly relating to the Jaws and
Diadem wells, with remaining costs spread across the Group's assets
in Egypt, Mauritania, Mexico and Suriname. Development costs in
Egypt were US$23.2m across the period.
Administration expenses and corporate asset costs include
US$7.0m of costs associated with the purchase of carbon
credits.
Included within net finance costs are the exchange loss suffered
on conversion of the India tax refund from INR to US$ of US$14.7m
and proceeds on disposal of the Group's residual shareholding in
Vedanta of US$12.8m.
Results for the period - Other operating income and expense
Continuing operations
Pre-award costs and unsuccessful exploration costs incurred in
the period were US$6.3m and US$28.7m, the latter largely relating
to the unsuccessful Jaws and Diadem wells in the UK. Impairment of
US$24.5m was charged on the Mexico asset in Block 10.
Administrative costs have increased year-on-year from US$24.6m
for the six months to June 2021 to US$33.5m. Recurring
administrative expenses remain largely in-line with prior years
with one-off costs associated with the successful resolution of the
India tax issue driving the increase.
Discontinued operations
The increase in the fair value of earn out consideration due on
the UK assets sold in 2021 led to a profit of US$120.9m over the
period.
Taxation
Continuing operations
The current tax charge for the period of US$23.2m, includes
US$23.0m of tax paid on Capricorn's behalf on profits from the
Egypt concessions. Capricorn receive a notional increased share of
production to cover the tax due which is recorded as other
income.
The deferred tax charge relating to operations in Egypt reflects
the timing difference on the recovery of assets.
Discontinued operations
A deferred tax charge of US$7.8m is attributable to the fair
value increase of the earn out consideration receivable, with the
Group's current UK tax losses no longer able to shelter this income
in full. Capricorn believe that future deductible costs for general
overheads over the coming years will fully offset any actual tax
charge in relation to the earn out income.
Audit Tender
On 30 June 2022, the Group's Audit Committee wrote to the
Financial Reporting Council ("FRC") to request a one-year extension
to PwC's appointment as auditor of the Capricorn Group, should the
merger with Tullow Oil fail to complete. Given the exceptional
circumstances of the proposed merger, it was considered that
running the audit tender as originally planned over the second half
of 2022 could compromise the robustness of the tender process. The
FRC subsequently approved this request with formal notice published
on the FRC website on 5 August 2022.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The directors confirm that these condensed consolidated interim
financial statements have been prepared in accordance with UK
adopted International Accounting Standard 34, 'Interim Financial
Reporting', and the Disclosure Guidance and Transparency Rules
sourcebook of the United Kingdom's Financial Conduct Authority and
give a true and fair view of the assets, liabilities, financial
position and loss for the period and that the interim management
report includes a fair review of the information required by DTR
4.2.7 and DTR 4.2.8, namely:
Ø an indication of important events that have occurred during
the first six months and their impact on the condensed set of
financial statements, and
Ø a description of the principal risks and uncertainties for the
remaining six months of the financial year.
There were no material related-party transactions in the first
six months and no material changes in the related-party
transactions described in the last annual report.
The directors of Capricorn Energy PLC are listed in the
Capricorn Energy PLC Annual Report for 31 December 2021. A list of
current directors is maintained on the Capricorn Energy PLC
website: www.capricornenergy.com .
By order of the Board.
Simon Thomson James Smith
Chief Executive Chief Financial Officer
5 September 2022 5 September 2022
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
Independent review report to Capricorn Energy PLC
Report on the condensed consolidated interim financial
statements
Our conclusion
We have reviewed Capricorn Energy PLC's condensed consolidated
interim financial statements (the "interim financial statements")
in the Financial Statements of Capricorn Energy PLC for the 6 month
period ended 30 June 2022 (the "period").
Based on our review, nothing has come to our attention that
causes us to believe that the interim financial statements are not
prepared, in all material respects, in accordance with UK adopted
International Accounting Standard 34, 'Interim Financial Reporting'
and the Disclosure Guidance and Transparency Rules sourcebook of
the United Kingdom's Financial Conduct Authority.
The interim financial statements comprise:
-- the Group Balance Sheet as at 30 June 2022;
-- the Group Income Statement and Group Statement of
Comprehensive Income for the period then ended;
-- the Group Statement of Cash Flows for the period then ended;
-- the Group Statement of Changes in Equity for the period then ended; and
-- the explanatory notes to the interim financial statements.
The interim financial statements included in the Financial
Statements of Capricorn Energy PLC have been prepared in accordance
with UK adopted International Accounting Standard 34, 'Interim
Financial Reporting' and the Disclosure Guidance and Transparency
Rules sourcebook of the United Kingdom's Financial Conduct
Authority.
Basis for conclusion
We conducted our review in accordance with International
Standard on Review Engagements (UK) 2410, 'Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity' issued by the Financial Reporting Council for use in the
United Kingdom. A review of interim financial information consists
of making enquiries, primarily of persons responsible for financial
and accounting matters, and applying analytical and other review
procedures.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and,
consequently, does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
We have read the other information contained in the Financial
Statements and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the interim financial statements.
Material uncertainty related to going concern
In forming our conclusion on the interim financial statements,
which is not modified, we have considered the adequacy of the
disclosure made in note 1.2 to the interim financial statements
concerning the Group's ability to continue as a going concern. As
outlined in note 1.2 to the interim financial statements, on 1 June
2022, the Capricorn Energy Plc Group announced its intention to
merge with Tullow Oil PLC to create a new combined Group and
ultimate parent undertaking. The Tullow transaction remains subject
to shareholder approval. Assuming such approval is received the
transaction is likely to complete within 12 months of the approval
of these interim financial statements. The current Directors will
not have full control over the new combined Group and therefore
they do not currently have full knowledge of the new ultimate
parent undertaking's future intentions and funding plans in
relation to the Group. The Group is also exploring potential
alternative transactions. These conditions, along with the other
matters explained in note 1.2 to the interim financial statements,
indicate the existence of a material uncertainty which may cast
significant doubt about the group's ability to continue as a going
concern. The interim financial statements do not include the
adjustments that would result if the group were unable to continue
as a going concern.
Based on our review procedures, which are less extensive than
those performed in an audit as described in the Basis for
conclusion section of this report, nothing has come to our
attention to suggest that the directors have inappropriately
applied the going concern basis of accounting in the preparation of
the interim financial statements.
Responsibilities for the interim financial statements and the
review
Our responsibilities and those of the directors
The Financial Statements, including the interim financial
statements, is the responsibility of, and has been approved by the
directors. The directors are responsible for preparing the
Financial Statements in accordance with the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial
Conduct Authority. In preparing the Financial Statements, including
the interim financial statements, the directors are responsible for
assessing the group's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless the directors
either intend to liquidate the group or to cease operations, or
have no realistic alternative but to do so.
Our responsibility is to express a conclusion on the interim
financial statements in the Financial Statements based on our
review. Our conclusion is based on procedures that are less
extensive than audit procedures, as described in the Basis for
conclusion paragraph of this report. This report, including the
conclusion, has been prepared for and only for the company for the
purpose of complying with the Disclosure Guidance and Transparency
Rules sourcebook of the United Kingdom's Financial Conduct
Authority and for no other purpose. We do not, in giving this
conclusion, accept or assume responsibility for any other purpose
or to any other person to whom this report is shown or into whose
hands it may come save where expressly agreed by our prior consent
in writing.
PricewaterhouseCoopers LLP
Chartered Accountants
Edinburgh
5 September 2022
Capricorn Energy PLC
Financial Statements
For the six months ended 30 June 2022
Contents
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Group Income Statement
Group Statement of Comprehensive Income
Group Balance Sheet
Group Statement of Cash Flows
Group Statement of Changes in Equity
Section 1 - Basis of Preparation
1.1 Accounting Policies: Basis of Preparation
1.2 Going Concern
Section 2 - Oil and Gas Assets and Operations
2.1 Gross Profit: Revenue and Cost of Sales
2.2 Intangible Exploration/Appraisal Assets
2.3 Property, Plant & Equipment - Development/Producing Assets
2.4 Goodwill
2.5 Capital Commitments
2.6 Impairment Testing Sensitivity Analysis
Section 3 - Working Capital, Financial Instruments and Long-Term Liabilities
3.1 Cash and Cash Equivalents
3.2 Loans and Borrowings
3.3 Trade and Other Receivables
3.4 Financial Assets and Liabilities at Fair Value Through Profit and
Loss
3.5 Trade and Other Payables
Section 4 - Income Statement Analysis
4.1 Segmental Analysis
4.2 Administrative and Other Expenses
4.3 Finance Costs
4.4 Earnings per Ordinary Share
Section 5 - Taxation
5.1 Tax Charge on (Loss)/Profit for the Period
5.2 Deferred Tax Liabilities
Section 6 - Discontinued Operations
6.1 Profit/(Loss) from Discontinued Operations
6.2 Cash Flow Information for Discontinued Operations
Section 7 - Share Capital
7.1 Called-Up Share Capital
Capricorn Energy PLC
Group Income Statement
For the six months ended 30 June 2022
Year
Six months ended Six months ended ended
30 June 30 June 31 December
2022 2021 2021
(unaudited) (unaudited) (audited)
Note US$m US$m US$m
Continuing operations
Revenue 2.1 137.4 0.5 57.1
Other income 2.1 23.0 - 7.3
Cost of sales (32.8) - (20.5)
Depletion charge 2.3 (72.0) - (31.2)
Gross profit 55.6 0.5 12.7
Pre-award costs (6.3) (8.6) (15.8)
Unsuccessful exploration costs 2.2 (28.7) (14.9) (50.6)
Impairment of intangible exploration/appraisal assets 2.2 (24.5) - (19.6)
Other operating income 0.1 0.2 0.6
Administrative and other expenses 4.2 (33.5) (24.6) (58.2)
Operating loss (37.3) (47.4) (130.9)
Exceptional income - India tax refund - - 1,070.7
Fair value loss - deferred consideration on business
combination (11.2) - (7.2)
Gain on financial assets at fair value through profit or
loss 1.5 3.1 5.5
Finance income 5.1 5.9 4.5
Finance costs 4.3 (6.8) (49.0) (68.9)
(Loss)/Profit before taxation from continuing operations (48.7) (87.4) 873.7
Tax charge 5.1 (24.8) - (4.2)
--------------------------------------------------------- ----- ------------------ ----------------- -------------
(Loss)/Profit from continuing operations (73.5) (87.4) 869.5
Profit/(Loss) from discontinued operations 6.1 120.9 (12.8) 25.0
--------------------------------------------------------- ----- ------------------ ----------------- -------------
Profit/(Loss) for the period attributable to equity
holders of the Parent 47.4 (100.2) 894.5
--------------------------------------------------------- ----- ------------------ ----------------- -------------
Earnings per share for (loss)/profit from continuing
operations:
(Loss)/Profit per ordinary share - basic (cents) 4.4 (18.10) (17.53) 175.58
(Loss)/Profit per ordinary share - diluted (cents) 4.4 (18.10) (17.53) 170.91
Earnings per share for profit/(loss) attributable to
equity holders of the Parent:
Profit/(Loss) per ordinary share - basic (cents) 4.4 11.64 (20.10) 180.63
Profit/(Loss) per ordinary share - diluted (cents) 4.4 11.38 (20.10) 175.82
Capricorn Energy PLC
Group Statement of Comprehensive Income
For the six months ended 30 June 2022
Year
Six months ended Six months ended ended
30 June 30 June 31 December
2022 2021 2021
(unaudited) (unaudited) (audited)
US$m US$m US$m
-------------------------------------------------------- --- --------------------- ----------------- -------------
Profit/(Loss) for the period attributable to equity holders
of the Parent 47.4 (100.2) 894.5
Other Comprehensive (Expense)/Income - items that may
be recycled to the Income Statement
Fair value loss on hedge options - (13.3) (14.2)
Hedging loss recycled to the Income Statement - 10.0 14.9
Fair value on hedge options recycled to the Income Statement
on cessation of hedge accounting - - 2.7
Currency translation differences (16.1) 1.1 2.0
Currency translation differences recycled to the Income
Statement on disposal of subsidiary - 39.4 54.7
Other Comprehensive (Expense)/Income for the period (16.1) 37.2 60.1
------------------------------------------------------------- --------------------- ----------------- -------------
Total Comprehensive Income/(Expense) for the period
attributable to equity holders of the
Parent 31.3 (63.0) 954.6
------------------------------------------------------------- --------------------- ----------------- -------------
Total Comprehensive (Expense)/Income from:
Continuing operations (89.6) (46.9) 874.9
Discontinuing operations 120.9 (16.1) 79.7
------------------------------------------------------------- --------------------- ----------------- -------------
31.3 (63.0) 954.6
------------------------------------------------------------ --------------------- ----------------- -------------
Capricorn Energy PLC
Group Balance Sheet
As at 30 June 2022
30 June 30 June 31 December
2022 2021 2021
(unaudited) (unaudited) (audited)
Note US$m US$m US$m
------------------------------------------------------------ ----- -------------- ------------- ------------
Non-current assets
Intangible exploration/appraisal assets 2.2 88.9 117.1 98.3
Property, plant & equipment - development/producing assets 2.3 334.1 - 373.9
Goodwill 2.4 25.4 - 25.4
Financial assets at fair value through profit or loss 3.4 119.2 - 120.4
Other property, plant & equipment and intangible assets 11.7 9.1 5.7
579.3 126.2 623.7
------------------------------------------------------------ ----- -------------- ------------- ------------
Current assets
Cash and cash equivalents 3.1 809.0 341.4 314.1
Inventory 10.8 - 10.8
Trade and other receivables 3.3 211.8 37.5 1,211.2
Financial assets at fair value through profit or loss 3.4 127.7 8.3 86.6
1,159.3 387.2 1,622.7
------------------------------------------------------------ ----- -------------- ------------- ------------
Assets held-for-sale - 724.9 -
------------------------------------------------------------ ----- -------------- ------------- ------------
Total assets 1,738.6 1,238.3 2,246.4
------------------------------------------------------------ ----- -------------- ------------- ------------
Current liabilities
Loans and borrowings 3.2 16.3 - 10.9
Lease liabilities 1.9 2.4 2.4
Derivative financial instruments - 6.8 -
Trade and other payables 3.5 138.2 22.4 152.2
Provisions - well abandonment 0.5 - -
Deferred consideration on business combinations 3.4 24.6 - 20.9
181.5 31.6 186.4
------------------------------------------------------------ ----- -------------- ------------- ------------
Non-current liabilities
Loans and borrowings 3.2 157.6 - 166.1
Lease liabilities 0.2 2.5 1.3
Provisions - well abandonment 3.0 2.2 2.2
Deferred consideration on business combinations 3.4 35.7 - 49.1
Deferred tax liabilities 5.2 52.1 - 42.7
248.6 4.7 261.4
------------------------------------------------------------ ----- -------------- ------------- ------------
Liabilities held-for-sale - 398.9 -
------------------------------------------------------------ ----- -------------- ------------- ------------
Total liabilities 430.1 435.2 447.8
------------------------------------------------------------ ----- -------------- ------------- ------------
Net assets 1,308.5 803.1 1,798.6
------------------------------------------------------------ ----- -------------- ------------- ------------
Equity attributable to equity holders of the Parent
Called-up share capital 7.1 8.0 12.6 12.6
Share premium 7.1 494.7 490.6 490.9
Shares held by ESOP/SIP Trusts (19.3) (19.1) (17.5)
Foreign currency translation (90.2) (90.3) (74.1)
Merger and capital reserves 45.5 40.8 40.9
Hedge reserve - (6.7) -
Retained earnings 869.8 375.2 1,345.8
------------------------------------------------------------ ----- -------------- ------------- ------------
Total equity 1,308.5 803.1 1,798.6
------------------------------------------------------------ ----- -------------- ------------- ------------
Capricorn Energy PLC
Group Statement of Cash Flows
For the six months ended 30 June 2022
Year
Six months ended Six months ended ended
30 June 30 June 31 December
2022 2021 2021
(unaudited) (unaudited) (audited)
US$m US$m US$m
-------------------------------------------------------------- ------------------ ----------------- ---------------
Cash flows from operating activities:
(Loss)/Profit before taxation from continuing operations (48.7) (87.4) 873.7
Profit/(Loss) before tax from discontinued operations (note
6.1) 128.7 (12.8) 198.8
-------------------------------------------------------------- ------------------ ----------------- ---------------
Profit/(Loss) before tax including discontinued operations 80.0 (100.2) 1,072.5
Adjustments for non-cash income and expense and non-operating
cash flows:
Other income - tax entitlement volumes (23.0) - (7.3)
Release of deferred revenue - (21.7) (21.7)
Unsuccessful exploration costs 28.7 14.9 50.6
Depreciation, depletion and amortisation charges 75.0 38.7 73.6
Impairment of intangible exploration/appraisal assets 24.5 - 19.6
Share-based payments charge 5.7 5.5 10.2
Impairment of disposal group non-current assets - 144.6 56.0
Exceptional income - India tax refund - - (1,070.7)
Fair value loss - deferred consideration on business
combination 11.2 - 7.2
(Gain)/Loss on financial assets at fair value through profit
or loss (129.2) (3.1) 2.6
Finance income (5.1) (5.9) (4.5)
Finance costs 6.8 57.0 78.7
Adjustments in current assets and liabilities:
Inventory movement - 9.0 (4.6)
Increase in trade and other receivables (note 3.3) (62.2) (18.5) (70.8)
Increase/(Decrease) in trade and other payables (note 3.5) 6.7 (19.0) (11.5)
Net cash flows from operating activities 19.1 101.3 179.9
-------------------------------------------------------------- ------------------ ----------------- ---------------
Cash flows from investing activities:
Exceptional tax income - India tax refund 1,056.0 - -
Expenditure on intangible exploration/appraisal assets (58.4) (18.9) (62.5)
Expenditure on development/producing assets (23.2) (6.4) (24.0)
Expenditure on other property, plant & equipment and
intangible assets (10.6) (1.4) (2.9)
Deferred consideration received - discontinued operations 75.7 - -
Consideration paid for assets acquired through business
combination (3.2) (7.9) (310.1)
Deferred consideration paid on business combination (20.9) - -
Expenditure on financial asset at fair value through profit
and loss - - (6.9)
Proceeds on disposal of financial assets 12.8 - -
Proceeds on disposal of intangible exploration/appraisal
assets - - 23.6
Proceeds on disposal of oil and gas assets - discontinued
operations - - 63.9
Proceeds on disposal of purchaser bonds - discontinuing
operations - - 30.0
Costs incurred on disposal of oil and gas assets - (6.0) (7.3)
Interest received and other finance income 2.7 0.1 0.2
Net cash flows from/(used in) investing activities 1,030.9 (40.5) (296.0)
-------------------------------------------------------------- ------------------ ----------------- ---------------
Cash flows from financing activities:
Return of cash to shareholders - (257.2) (257.2)
Share re-purchase (528.6) - (7.8)
Debt arrangement fees - - (4.6)
Other interest and charges (7.3) (3.5) (5.8)
Proceeds from loans and borrowings - - 181.4
Repayment of loans and borrowings (3.7) - -
Proceeds from issue of shares 3.8 0.5 0.9
Cost of shares purchased (19.8) (8.3) (8.7)
Lease payments (1.4) (27.0) (46.1)
Net cash flows used in financing activities (557.0) (295.5) (147.9)
-------------------------------------------------------------- ------------------ ----------------- ---------------
Net increase/(decrease) in cash and cash equivalents 493.0 (234.7) (264.0)
Opening cash and cash equivalents at the beginning of the
period 314.1 569.6 569.6
Foreign exchange differences 1.9 6.5 8.5
-------------------------------------------------------------- ------------------ ----------------- ---------------
Closing cash and cash equivalents (note 3.1) 809.0 341.4 314.1
-------------------------------------------------------------- ------------------ ----------------- ---------------
Capricorn Energy PLC
Group Statement of Changes in Equity
For the six months ended 30 June 2022
Equity
share Shares
capital held by Foreign Merger and
and share ESOP/ SIP currency capital Hedge Retained Total
premium Trusts translation reserves reserve earnings equity
US$m US$m US$m US$m US$m US$m US$m
------------------- ------------ ------------ ------------- ------------ ------------ ------------ ------------
At 1 January 2021 502.7 (13.4) (130.8) 40.8 (3.4) 729.7 1,125.6
Profit for the
year - - - - - 894.5 894.5
Fair value on
hedge options - - - - (14.2) - (14.2)
Hedging loss
recycled to the
Income Statement - - - - 14.9 - 14.9
Fair value on
hedge options
recycled to the
Income Statement
on cessation of
hedge accounting - - - - 2.7 - 2.7
Currency
translation
differences - - 2.0 - - - 2.0
Currency
translation
differences
recycled on
disposal of
subsidiary - - 54.7 - - - 54.7
Total
comprehensive
income - - 56.7 - 3.4 894.5 954.6
Return of cash to
shareholders - - - - - (257.2) (257.2)
Share-based
payments - - - - - 10.2 10.2
Exercise of
employee share
options 0.9 - - - - - 0.9
Share re-purchase (0.1) - - 0.1 - (26.8) (26.8)
Cost of shares
purchased - (8.7) - - - - (8.7)
Cost of shares
vesting - 4.6 - - - (4.6) -
At 31 December
2021 503.5 (17.5) (74.1) 40.9 - 1,345.8 1,798.6
Profit for the
period - - - - - 47.4 47.4
Currency
translation
differences - - (16.1) - - - (16.1)
Total
comprehensive
(expense)/income - - (16.1) - - 47.4 31.3
Share-based
payments - - - - - 5.7 5.7
Exercise of
employee share
options 3.8 - - - - - 3.8
Share re-purchase (4.6) - - 4.6 - (511.1) (511.1)
Cost of shares
purchased - (19.8) - - - - (19.8)
Cost of shares
vesting - 18.0 - - - (18.0) -
At 30 June 2022 502.7 (19.3) (90.2) 45.5 - 869.8 1,308.5
------------------- ------------ ------------ ------------- ------------ ------------ ------------ ------------
Capricorn Energy PLC
Group Statement of Changes in Equity (continued)
For the six months ended 30 June 2021
Equity
share Shares
capital held by Foreign Merger and
and share ESOP/ SIP currency capital Hedge Retained Total
premium Trusts translation reserves reserve earnings equity
US$m US$m US$m US$m US$m US$m US$m
------------------- ------------ ------------ ------------- ------------ ------------ ------------ ------------
At 1 January 2021 502.7 (13.4) (130.8) 40.8 (3.4) 729.7 1,125.6
Loss for the
period - - - - - (100.2) (100.2)
Fair value on
hedge options - - - - (13.3) - (13.3)
Hedging gain
recycled to the
Income Statement - - - - 10.0 - 10.0
Currency
translation
differences - - 1.1 - - - 1.1
Currency
translation
differences
recycled on
disposal of
subsidiary - - 39.4 - - - 39.4
Total
comprehensive
income/(expense) - - 40.5 - (3.3) (100.2) (63.0)
Exercise of
employee share
options 0.5 - - - - - 0.5
Share-based
payments - - - - - 5.5 5.5
Cost of shares
purchased - (8.3) - - - - (8.3)
Cost of shares
vesting - 2.6 - - - (2.6) -
Return of cash to
shareholders - - - - - (257.2) (257.2)
------------------- ------------ ------------ ------------- ------------ ------------ ------------ ------------
At 30 June 2021 503.2 (19.1) (90.3) 40.8 (6.7) 375.2 803.1
------------------- ------------ ------------ ------------- ------------ ------------ ------------ ------------
Section 1 - Basis of Preparation
1.1 Accounting Policies: Basis of Preparation
The half-yearly condensed consolidated Financial Statements (the
"Financial Statements") for the six months ended 30 June 2022 have
been prepared in accordance with the Disclosure and Transparency
Rules of the Financial Conduct Authority and with UK adopted
International Accounting Standard IAS 34, 'Interim financial
reporting'. They should be read in conjunction with the annual
Financial Statements for the year ended 31 December 2021, which
have been prepared in accordance with UK-adopted International
Accounting Standards and with the requirements of the Companies Act
2006 as applicable to companies reporting under those
standards.
This half-yearly report was approved by the Directors on 5
September 2022. The disclosed figures, which have been reviewed but
not audited, are not statutory accounts in terms of Section 434 of
the Companies Act 2006 . Statutory accounts for the year ended 31
December 2021, on which the auditors gave an unqualified audit
report, which did not contain an emphasis of matter paragraph or
any statement under section 498 of the Companies Act 2006, have
been filed with the Registrar of Companies.
This half-yearly report has been prepared on a basis consistent
with the accounting policies expected to be applied for the year
ending 31 December 2022 and uses the same accounting and financial
risk management policies and methods of computation as those
applied for the year ended 31 December 2021, other than changes to
accounting policies resulting from the adoption of new or revised
accounting standards. C hanges to IFRS effective 1 January 2022
have no significant impact on Capricorn's accounting policies or
Financial Statements. The Capricorn Energy PLC Group's proposed
merger with Tullow Oil PLC is not expected to result in any change
to the Group's current accounting policies.
Significant key estimates and assumptions are unchanged from
those applied in the year ended 31 December 2021 and therefore
apply to these Financial Statements.
1.2 Going Concern
The Directors have considered the factors relevant to support a
statement of going concern. In assessing whether the going concern
assumption is appropriate, the Board considered the Group cash flow
forecasts under various scenarios, identifying risks and mitigating
factors and ensuring the Group has sufficient funding to meet its
current and contracted commitments as and when they fall due for a
period of at least 12 months from the date of signing these
Financial Statements.
At the balance sheet date and the date of this report, the Group
has significant surplus cash balances, following receipt of the
India tax refund, exceeding debt drawn on the Senior Secured
Borrowing and Junior Debt Facilities which part-funded the Egypt
acquisition.
Under both Capricorn's and the lenders assumptions, the Group
has sufficient resources to maintain compliance with the financial
covenant associated with the facilities in terms of a twelve-month
forward-looking liquidity test. Downside scenarios run include a
return to sustained low oil prices, reductions in forecast
production, increases to forecast operating and drilling costs, and
a reduction in amounts available to be drawn from borrowing
facilities.
On 1 June 2022, Capricorn announced its intention to merge with
Tullow Oil PLC to create a new combined Group and ultimate parent
undertaking. The transaction remains subject to shareholder
approval. Assuming such approval is received, the transaction is
expected to complete within 12 months of these Financial
Statements. There is a reasonable expectation that the new Group
and ultimate parent undertaking will have adequate resources to
continue in operational existence for the foreseeable future and
provide ongoing support to the Company. The Directors believe it is
therefore appropriate to continue to adopt the going concern basis
of accounting in preparing these financial statements. The
Capricorn Directors will not have full control over the new
Combined Group and therefore do not have full knowledge of the new
ultimate parent undertaking's future intentions and funding plans
in relation to the new Group. The Group is also exploring potential
alternative transactions. These conditions indicate the existence
of a material uncertainty over the Group's ability to continue as a
going concern.
These Financial Statements do not include the adjustments that
would result if the Group was unable to continue as a going
concern.
Section 2 - Oil and Gas Assets and Operations
2.1 Gross Profit: Revenue and Cost of Sales
Six months Year
ended Six months ended ended
30 June 30 June 31 December
2022 2021 2021
US$m US$m US$m
------------------------------------------ ----------- ----------------- -------------
Oil sales 112.9 - 41.3
Gas sales 24.5 - 14.9
------------------------------------------ ----------- ----------------- -------------
Revenue from oil and gas sales 137.4 - 56.2
Royalty income - 0.5 0.9
------------------------------------------ ----------- ----------------- -------------
Total revenue 137.4 0.5 57.1
------------------------------------------ ----------- ----------------- -------------
Other Income - Tax entitlement volumes 23.0 - 7.3
------------------------------------------ ----------- ----------------- -------------
Other income 23.0 - 7.3
------------------------------------------ ----------- ----------------- -------------
Production costs and inventory movements (32.8) - (20.5)
------------------------------------------ ----------- ----------------- -------------
Cost of sales (32.8) - (20.5)
------------------------------------------ ----------- ----------------- -------------
Depletion (note 2.3) (72.0) - (31.2)
------------------------------------------ ----------- ----------------- -------------
Gross profit 55.6 0.5 12.7
------------------------------------------ ----------- ----------------- -------------
Oil and gas revenue in Egypt for H1 2022, was US$137.4m (period
from 24 September 2021 to 31 December 2021: US$56.2m), from net
entitlement volumes of 2.6 mmboe (period from 24 September 2021 to
31 December 2021: 1.4 mmboe). Oil sales price realised averaged
US$110.9/boe (period from 24 September 2021 to 31 December 2021:
US$77.8/boe) and gas sales prices remained at US$2.9/mscf (period
from 24 September 2021 to 31 December 2021: US$2.9/mscf). Other
income represents additional entitlement to cover tax due which is
paid on Capricorn's behalf by EGPC; see section 5.
Cost of sales over the period were US$32.8m (period from 24
September 2021 to 31 December 2021: US$20.5m), or US$5.1/boe
(period from 24 September 2021 to 31 December 2021: US$6.0/boe) (on
a WI basis).
Section 2 - Oil and Gas Assets and Operations
2.2 Intangible Exploration/Appraisal Assets
Egypt Eastern Western Total
US$m US$m US$m US$m
---------------------------------- ------- -------- -------- -------
Cost
At 1 January 2021 - 34.9 113.2 148.1
Additions - 7.1 12.8 19.9
Unsuccessful exploration costs - (15.1) 0.2 (14.9)
Transfer to assets held-for-sale - - (36.0) (36.0)
---------------------------------- ------- -------- -------- -------
At 30 June 2021 - 26.9 90.2 117.1
Additions 6.6 5.1 48.4 60.1
Unsuccessful exploration costs (2.9) (3.1) (29.7) (35.7)
Transfer to assets held-for-sale - - 36.0 36.0
Disposals - - (59.6) (59.6)
At 31 December 2021 3.7 28.9 85.3 117.9
Additions 8.1 6.8 28.9 43.8
Unsuccessful exploration costs 0.6 - (29.3) (28.7)
At 30 June 2022 12.4 35.7 84.9 133.0
---------------------------------- ------- -------- -------- -------
Impairment
At 1 January 2021 - - 36.0 36.0
Transfer to assets held-for-sale - - (36.0) (36.0)
---------------------------------- ------- -------- -------- -------
At 30 June 2021 - - - -
Charge for the period - - 19.6 19.6
Transfer to assets held-for-sale - - 36.0 36.0
Disposals - - (36.0) (36.0)
At 31 December 2021 - - 19.6 19.6
Charge for the period - - 24.5 24.5
---------------------------------- ------- -------- -------- -------
At 30 June 2022 - - 44.1 44.1
---------------------------------- ------- -------- -------- -------
Net book value
---------------------------------- ------- -------- -------- -------
At 30 June 2021 - 26.9 90.2 117.1
---------------------------------- ------- -------- -------- -------
At 31 December 2021 3.7 28.9 65.7 98.3
---------------------------------- ------- -------- -------- -------
At 30 June 2022 12.4 35.7 40.8 88.9
---------------------------------- ------- -------- -------- -------
All additions to intangible exploration/appraisal assets were
funded through cash and working capital.
Egypt
Additions in Egypt of US$8.1m mainly relate to costs incurred in
a new exploration phase in North Um Baraka, Sitra, Alam El Shawish
West and the Capricorn operated concession Southeast Horus. A
release of accruals of US$0.6m relating an unsuccessful North Um
Baraka exploration well drilled in 2021 were credited to the Income
Statement through a write-back of unsuccessful exploration
costs.
Eastern
Additions in the period of US$6.8m were incurred on Mauritania
Block 7.
Western
In the UK there were additions of US$5.0m on the P2389 licence
containing the Diadem prospect, with remaining additions of US$3.4m
incurred across the rest of the UK portfolio. US$0.7m of the Diadem
additions were short-term lease costs. During the period costs of
US$13.5m and US$11.6m were charged to the Income Statement as
unsuccessful costs on the Jaws (P2380 licence) and Diadem (P2379
licence) prospects respectively, with a further US$1.8m of
unsuccessful costs incurred on other UK portfolio licences.
In Mexico additions for the period of US$4.6m were spread across
Blocks 7, 9, 10 and 15. Unsuccessful costs of US$2.4m were charged
to the Income Statement for Blocks 7, 9 and 15. All costs relating
to Blocks 9 and 15 have been charged to the Income Statement and
costs relating to Block 10 have been fully impaired (discussed
further below). Remaining capitalised costs relate to Block 7 where
the Yatzil well is planned later in 2022.
In Suriname additions for the period were US$0.9m.
Section 2 - Oil and Gas Assets and Operations (continued)
2.2 Intangible Exploration/Appraisal Assets (continued)
Impairment review
At 30 June 2022, Capricorn reviewed its intangible
exploration/appraisal assets for indicators of impairment. In Block
10 Mexico, no further exploration is planned and the Group do not
intend to join partners in any future development of the two
discoveries on the licence. Costs of US$24.5m have therefore been
fully impaired at the balance sheet date. No further intangible
exploration/appraisal asset impairments have been identified.
2.3 Property, Plant & Equipment - Development/Producing Assets
UK UK Producing
Egypt Producing Assets right-of-use leased assets Total
US$m US$m US$m US$m
------------------------------------------------ ------ ------------------ ---------------------------- ----------
Cost
At 1 January 2021 - 1,177.7 316.3 1,494.0
Transfer to assets held-for-sale - (1,177.7) (316.3) (1,494.0)
At 30 June 2021 - - - -
Acquisitions through business combinations 390.2 - - 390.2
Additions 14.9 - - 14.9
At 31 December 2021 405.1 - - 405.1
Additions 32.2 - - 32.2
------------------------------------------------ ------ ------------------ ---------------------------- ----------
At 30 June 2022 437.3 - - 437.3
------------------------------------------------ ------ ------------------ ---------------------------- ----------
Depletion and amortisation
At 1 January 2021 - 517.0 127.2 644.2
Depletion and amortisation charges -
discontinued operations - 27.1 8.2 35.3
Transfer to assets held-for-sale - (544.1) (135.4) (679.5)
------------------------------------------------ ------ ------------------ ---------------------------- ----------
At 30 June 2021 - - - -
Depletion 31.2 - - 31.2
At 31 December 2021 31.2 - - 31.2
Depletion 72.0 - - 72.0
At 30 June 2022 103.2 - - 103.2
------------------------------------------------ ------ ------------------ ---------------------------- ----------
Net book value
------------------------------------------------ ------ ------------------ ---------------------------- ----------
At 30 June 2021 - - - -
------------------------------------------------ ------ ------------------ ---------------------------- ----------
At 31 December 2021 373.9 - - 373.9
------------------------------------------------ ------ ------------------ ---------------------------- ----------
At 30 June 2022 334.1 - - 334.1
------------------------------------------------ ------ ------------------ ---------------------------- ----------
Additions on development activity in the period were funded
through cash and working capital.
In Egypt, depletion of US$72.0m was charged to the Income
Statement based on entitlement interest production. The costs for
depletion include future capital costs-to-complete consistent with
the life-of-field reserve estimates used in the calculation.
Impairment tests conducted on development assets in Egypt did
not identify any impairment.
Section 2 - Oil and Gas Assets and Operations (continued)
2.4 Goodwill
US$m
----------------------------------------- -----
At 1 January 2021 and 30 June 2021 -
Goodwill arising on acquisition 25.4
----------------------------------------- -----
At 31 December 2021 and at 30 June 2022 25.4
----------------------------------------- -----
At 30 June 2022, Goodwill, which relates entirely to Egypt, was
tested for impairment. No impairment was identified.
The Group has not adjusted opening balances recorded on the
recognition of assets through the Egypt business combination.
2.5 Capital Commitments
At At At
30 June 30 June 31 December
2022 2021 2021
Oil and gas expenditure: US$m US$m US$m
------------------------------------------------------------ --------- --------- -------------
Intangible exploration/appraisal assets 52.4 49.9 71.8
Property, plant & equipment - development/producing assets 46.3 - 93.7
Contracted for 98.7 49.9 165.5
------------------------------------------------------------ --------- --------- -------------
Capital commitments represent Capricorn's share of obligations
relating to its interests in joint operations. These commitments
include Capricorn's share of the capital commitments of the joint
operations themselves.
The capital commitments for intangible exploration/appraisal
assets include US$10.7m in Egypt, US$12.6m in Mexico, and US$29.1m
for operations in the UK on the Diadem prospect.
At 30 June 2022 and 30 December 2021, the capital commitments
for property, plant & equipment - development/producing assets
related to Egypt operations.
At 30 June 2022, Capricorn had commitments of US$7.8m relating
to short term-leases for the UK Diadem prospect. This amount is
also included in the total intangible exploration/appraisal assets
commitment shown above.
2.6 Impairment Testing Sensitivity Analysis
Impairment sensitivity analysis was performed on the Egypt
cash-generating unit, including goodwill, and the underlying
development/producing assets.
No impairment arose using the Group's year-end 31 December 2021
long-term oil price assumption of US$55 per bbl, with costs
escalated at 4% long-term. No downside sensitivities have been
performed on the long-term oil price assumption.
Increasing the long-term cost escalation assumption to 6% did
not result in an impairment at long-term oil price assumptions
above US$60 per bbl. Increasing long-term cost escalation to 8% did
not result in an impairment at long-term oil price assumptions
above US$65 per bbl.
Impairment sensitivity analysis performed on the Group
discount-rate assumption of 10% did not identify any impairment
when discount rates were increased to 12% and 14%.
Section 3 - Working Capital, Financial Instruments and Long-Term
Liabilities
3.1 Cash and Cash Equivalents
At At At
30 June 30 June 31 December
2022 2021 2021
US$m US$m US$m
-------------------------------------- --------- --------- -------------
Cash at bank 99.8 3.9 84.8
Bank deposits less than three months 73.0 - -
Money market funds 636.2 337.5 229.3
809.0 341.4 314.1
-------------------------------------- --------- --------- -------------
3.2 Loans and Borrowings
At At At
30 June 30 June 31 December
2022 2021 2021
Reconciliation of opening and closing liabilities to cash flow movements: US$m US$m US$m
--------------------------------------------------------------------------- --------- --------- -------------
Opening liabilities 177.0 - -
Loan advances in the period disclosed in the Cash Flow Statement:
Senior Debt Facility - - 141.4
Junior Debt Facility - - 40.0
--------------------------------------------------------------------------- --------- --------- -------------
- - 181.4
--------------------------------------------------------------------------- --------- --------- -------------
Loan repayments in the period disclosed in the Cash Flow Statement:
Senior Debt Facility (3.7) - -
(3.7) - -
--------------------------------------------------------------------------- --------- --------- -------------
Other movements in Cash Flow Statement:
Debt arrangement fees - - (4.6)
Non-cash movements:
Amortisation of debt arrangement fees 0.6 - 0.2
--------------------------------------------------------------------------- --------- --------- -------------
Closing liabilities 173.9 - 177.0
--------------------------------------------------------------------------- --------- --------- -------------
Amounts due less than one year 16.3 - 10.9
Amounts due greater than one year 157.6 - 166.1
--------------------------------------------------------------------------- --------- --------- -------------
Closing liabilities 173.9 - 177.0
--------------------------------------------------------------------------- --------- --------- -------------
Section 3 - Working Capital, Financial Instruments and Long-Term
Liabilities
3.3 Trade and Other Receivables
At At At
30 June 30 June 31 December
2022 2021 2021
US$m US$m US$m
----------------------------- --------- --------- -------------
India tax refund receivable - - 1,070.7
Trade receivables 113.6 0.1 63.3
Other receivables 22.8 9.5 14.0
Prepayments 7.7 12.5 7.8
Joint operation receivables 67.7 15.4 55.4
211.8 37.5 1,211.2
----------------------------- --------- --------- -------------
The India tax refund was received in February 2022. Trade
receivables relate to the Group's producing assets in Egypt and
discussions are ongoing with EGPC and the operator to manage the
receivables position. Other receivables include VAT recoverable in
the UK and Mexico.
Joint operation receivables include Capricorn's working interest
share of the receivables relating to joint operations and amounts
recoverable from partners in joint operations.
30 June 30 June
Reconciliation of opening and closing receivables to operating cash flow 2022 2021 31 December 2021
movements: US$m US$m US$m
Opening trade and other receivables 1,211.2 74.6 74.6
Closing trade and other receivables (211.8) (37.5) (1,211.2)
---------------------------------------------------------------------------- ---------- --------- -----------------
Decrease/(Increase) in trade and other receivables 999.4 37.1 (1,136.6)
Increase in trade and other receivables classified as assets held-for-sale - (48.4) -
---------------------------------------------------------------------------- ---------- --------- -----------------
Decrease/(Increase) in trade and other receivables including
assets-held-for-sale 999.4 (11.3) (1,136.6)
Foreign exchange (18.7) 0.5 0.2
India tax refund (received)/receivable (1,056.0) - 1,070.7
Increase/(Decrease) in joint operation receivables relating to investing
activities for expenditure
on oil and gas assets 11.1 (6.5) (1.3)
Increase in other debtors relating to investing activities 1.7 - 0.2
(Decrease)/Increase in prepayments relating to investing activities (0.2) 6.1 2.7
Increase/(Decrease) in prepayments and other receivables relating to
financing activities 0.5 (7.3) (7.4)
Trade and joint operation receivables derecognised on disposal of the UK
assets - - (57.4)
Trade and other receivables recognised on purchase of Egypt assets - - 58.1
Increase in trade and other receivables movement recorded in operating
cash flows (62.2) (18.5) (70.8)
---------------------------------------------------------------------------- ---------- --------- -----------------
The foreign exchange loss of US$18.7m, primarily arising on
settlement of the India tax refund, is offset by foreign exchange
gains in the period, leading to a net gain of US$4.5m which is
included within finance income.
Section 3 - Working Capital, Financial Instruments and Long-Term
Liabilities
3.4 Financial Assets and Liabilities at Fair Value Through Profit and Loss
At At At
30 June 30 June 31 December
2022 2021 2021
Financial Assets US$m US$m US$m
--------------------------------------------------------------------------------- --------- --------- -------------
Non-current assets
Financial assets at fair value through profit or loss - earn out consideration 113.2 - 113.5
Financial assets at fair value through profit or loss - non-listed investment
fund 6.0 - 6.9
--------------------------------------------------------------------------------- --------- --------- -------------
119.2 - 120.4
--------------------------------------------------------------------------------- --------- --------- -------------
Current assets
Financial assets at fair value through profit or loss - earn out consideration 127.7 - 75.8
Financial assets at fair value through profit or loss - listed equity
investments - 8.3 10.8
--------------------------------------------------------------------------------- --------- --------- -------------
127.7 8.3 86.6
--------------------------------------------------------------------------------- --------- --------- -------------
In March 2022, the Group sold its remaining shareholding in
Vedanta, listed in India, for INR968m (US$12.7m). The earn out
consideration is due from Waldorf Production UK PLC following the
sale of the Group's UK producing assets in 2021.
At At At
30 June 30 June 31 December
2022 2021 2021
Financial Liabilities US$m US$m US$m
--------------------------------------------------------------------------------- --------- --------- -------------
Current liabilities
Financial liabilities at fair value through profit or loss - deferred
consideration on business
combinations (24.6) - (20.9)
Non-current liabilities
Financial liabilities at fair value through profit or loss - deferred
consideration on business
combinations (35.7) - (49.1)
Deferred consideration, based on future oil prices, is due to
Shell following the Egypt business combination in the prior
year.
Fair Value measurements
At At At
30 June 30 June 31 December
2022 2021 2021
US$m US$m US$m
------------------------------------------------------------ --------- --------- -------------
Assets measured at fair value - Level 1
Financial assets at fair value through profit or loss
Listed equity shares - 8.3 10.8
Assets measured at fair value - Level 2
Financial assets at fair value through profit or loss
Earn out consideration 240.9 - 189.3
Non-listed investment fund 6.0 - 6.9
Liabilities measured at fair value - Level 2
Financial liabilities at fair value through profit or loss
Deferred consideration on business combinations (58.5) - (68.2)
Liabilities measured at fair value - Level 3
Financial liabilities at fair value through profit or loss
Deferred consideration on business combinations (1.8) - (1.8)
------------------------------------------------------------ --------- --------- -------------
186.6 8.3 137.0
------------------------------------------------------------ --------- --------- -------------
Section 3 - Working Capital, Financial Instruments and Long-Term
Liabilities (continued)
3.5 Trade and Other Payables
At At At
30 June 30 June 31 December
2022 2021 2021
US$m US$m US$m
------------------------------------ --------- --------- -------------
Trade payables 14.4 0.9 1.6
Other taxation and social security 1.3 2.1 0.2
Accruals and other payables 27.6 15.0 59.5
Joint operation payables 94.9 4.4 90.9
138.2 22.4 152.2
------------------------------------ --------- --------- -------------
Joint operation payables include Capricorn's share of the trade
and other payables of the joint operations in which the Group
participates. Where Capricorn is an operator of the joint
operation, joint operation payables also include amounts that
Capricorn will settle to third parties on behalf of joint operation
partners. The amount to be recovered from partners for their share
of such liabilities is included within joint operation
receivables.
The reduction in accruals and other payables from the year end
reflects settlement of amounts due in connection with the share
buy-back of US$16.3m, settlement of working capital balances of
US$11.1m due to Waldorf in connection with UK producing assets, a
US$5.0m release of accruals relating to Egypt working capital
settlements on the prior-year business combination and a reduction
in bonus and other accruals.
30 June 30 June
Reconciliation of opening and closing payables to operating cash flow 2022 2021 31 December 2021
movements: US$m US$m US$m
Opening trade and other payables (152.2) (91.6) (91.6)
Closing trade and other payables 138.2 22.4 152.2
------------------------------------------------------------------------------- -------- -------- -----------------
(Decrease)/Increase in trade and other payables (14.0) (69.2) 60.6
Increase in trade and other payables classified as liabilities held-for-sale - 31.9 -
------------------------------------------------------------------------------- -------- -------- -----------------
(Decrease)/Increase in trade and other payables including liabilities
held-for-sale (14.0) (37.3) 60.6
Foreign exchange 3.0 (0.1) -
(Increase)/Decrease in joint operation payables relating to investing
activities (5.7) 11.0 (16.4)
Decrease/(Increase) in accruals relating to other financing activities -
repurchase of shares 18.9 - (19.0)
Decrease in accruals and other payables relating to investing activities 3.0 6.5 1.2
Increase/(Decrease) in accruals and other payables relating to financing
activities 1.5 0.9 (0.6)
Trade and other payables derecognised on disposal of the UK assets - - 22.2
Joint operation payables recognised on purchase of Egypt assets - - (59.5)
Increase/(Decrease) in trade and other payables recorded in operating cash
flows 6.7 (19.0) (11.5)
------------------------------------------------------------------------------- -------- -------- -----------------
Section 4 - Income Statement Analysis
4.1 Segmental Analysis
Segmental Disclosures and Discontinued Operations
The UK producing assets, formerly held within the UK segment,
were classified as held -- for-sale on 8 March 2021, with results
presented as discontinuing operations.
IFRS 8 'Operating Segments' does not provide guidance as to
whether segment disclosures apply to discontinued operations. For
comparative periods, Capricorn has presented segmental disclosures
inclusive of the results of the discontinued operations relating to
the UK producing assets. The current period movements, largely
relating to fair value movements on the earn-out consideration due,
are included within the "Other Capricorn Energy Group" segment.
Capital expenditure incurred subsequent to the transfer to
held-for-sale is included within the relevant segment, as it has
been reported to the Capricorn Energy PLC Board, but is deducted
within the group segment adjustment to agree back to balance sheet
additions.
Operating segments
Capricorn's assets are managed through business units which form
the operating segments. Each business unit is headed by a Regional
Director (a Regional Director may be responsible for more than one
business unit) and the Board monitors the results of each segment
separately for the purposes of making decisions about resource
allocation and performance assessment.
The Eastern operating segment includes costs associated with
interests in Côte d'Ivoire, Mauritania and Israel. The Western
segment holds continuing UK North Sea exploration interests, Mexico
and Suriname. The Egypt segment was added following the acquisition
in 2021.
The Other Capricorn Energy Group segment exists to accumulate
the activities and results of the Parent and other holding
companies together with other unallocated expenditure and net
assets/liabilities including amounts of a corporate nature not
specifically attributable to any of the business units.
Non-current assets as analysed on a segmental basis consist of:
intangible exploration/appraisal assets; property, plant &
equipment -development/producing assets; and other property, plant
& equipment and intangible assets.
Section 4 - Income Statement Analysis (continued)
4.1 Segmental Analysis (continued)
The segment results for the six months ended 30 June 2022 are as
follows:
Egypt Eastern Western Other Capricorn Energy Group Total
US$m US$m US$m US$m US$m
------------------------------------------------ ------- -------- -------- ----------------------------- --------
Revenue 137.4 - - - 137.4
Other income 23.0 - - - 23.0
Cost of sales (32.8) - - - (32.8)
Depletion and amortisation charges (72.0) - - - (72.0)
Gross profit 55.6 - - - 55.6
Pre-award costs (2.5) - (0.5) (3.3) (6.3)
Unsuccessful exploration costs 0.6 - (29.3) - (28.7)
Impairment of intangible exploration/appraisal
assets - - (24.5) - (24.5)
Other operating income - - - 0.1 0.1
Depreciation - purchased assets - - (0.1) (0.2) (0.3)
Amortisation - right-of-use assets - - (0.1) (1.0) (1.1)
Amortisation of other intangible assets - - (0.1) (1.5) (1.6)
Other administrative expenses (0.2) - (0.3) (30.0) (30.5)
Operating profit/(loss) 53.5 - (54.9) (35.9) (37.3)
Fair value loss on deferred consideration (11.2) - - - (11.2)
Gain on fair value of financial asset - - - 1.5 1.5
Interest income - - 0.1 3.1 3.2
Interest expense (5.6) - - (0.1) (5.7)
Other net finance (expense)/income (1.2) - 2.0 - 0.8
Profit/(Loss) before taxation from continuing
operations 35.5 - (52.8) (31.4) (48.7)
Tax charge (24.6) - - (0.2) (24.8)
------------------------------------------------ ------- -------- -------- ----------------------------- --------
Profit/(Loss) for the period from continuing
operations 10.9 - (52.8) (31.6) (73.5)
Profit from discontinued operations - - - 120.9 120.9
------------------------------------------------ ------- -------- -------- ----------------------------- --------
Profit/(Loss) attributable to equity holders
of the Parent 10.9 - (52.8) 89.3 47.4
------------------------------------------------ ------- -------- -------- ----------------------------- --------
Balances at 30 June 2022:
Capital expenditure 40.3 6.8 28.9 9.3 85.3
------------------------------------------------ ------- -------- -------- ----------------------------- --------
Total assets 595.2 36.0 314.2 793.2 1,738.6
------------------------------------------------ ------- -------- -------- ----------------------------- --------
Total liabilities 376.3 1.1 23.8 28.9 430.1
------------------------------------------------ ------- -------- -------- ----------------------------- --------
Non-current assets 371.8 35.7 35.6 17.0 460.1
------------------------------------------------ ------- -------- -------- ----------------------------- --------
Section 4 - Income Statement Analysis (continued)
4.1 Segmental Analysis (continued)
The segment results for the six months ended 30 June 2021 were
as follows:
Other Capricorn Group
Eastern Western UK Producing Assets Energy Group adj for segments Total
US$m US$m US$m US$m US$m US$m
---------------------- -------- -------- -------------------- --------------------- ------------------- --------
Revenue - - 256.6 0.5 (256.6) 0.5
Cost of sales - - (81.5) - 81.5 -
Depletion and
amortisation charges - - (35.3) - 35.3 -
Gross profit - - 139.8 0.5 (139.8) 0.5
Pre-award costs (0.1) (1.6) - (6.9) - (8.6)
Unsuccessful
exploration costs (15.1) 0.2 - - - (14.9)
Other operating
income - - - 0.2 - 0.2
Depreciation -
purchased assets - - - (0.1) - (0.1)
Amortisation -
right-of-use assets - (0.1) - (0.9) - (1.0)
Amortisation of other
intangible assets - (0.2) - (2.1) - (2.3)
Other administrative
expenses - (0.3) - (20.9) - (21.2)
Impairment of
disposal group - - (144.6) - 144.6 -
Operating loss (15.2) (2.0) (4.8) (30.2) 4.8 (47.4)
Gain on fair value of
financial asset - - - 3.1 - 3.1
Interest income - - - 0.1 - 0.1
Interest expense - - (5.8) (0.1) 5.8 (0.1)
Other net finance
income/(expense) - 0.1 (2.2) (43.2) 2.2 (43.1)
Loss before taxation
from continuing
operations (15.2) (1.9) (12.8) (70.3) 12.8 (87.4)
Tax charge - - - - - -
---------------------- -------- -------- -------------------- --------------------- ------------------- --------
Loss for the period
from continuing
operations (15.2) (1.9) (12.8) (70.3) 12.8 (87.4)
Loss from
discontinued
operations - - - - (12.8) (12.8)
---------------------- -------- -------- -------------------- --------------------- ------------------- --------
Loss attributable
to equity holders
of the Parent (15.2) (1.9) (12.8) (70.3) - (100.2)
---------------------- -------- -------- -------------------- --------------------- ------------------- --------
Balances at 30 June
2021:
Capital expenditure 7.1 12.8 3.3 0.9 (3.6) 20.5
---------------------- -------- -------- -------------------- --------------------- ------------------- --------
Total assets 28.9 114.7 724.9 370.5 (0.7) 1,238.3
---------------------- -------- -------- -------------------- --------------------- ------------------- --------
Total liabilities 0.9 8.2 408.0 18.8 (0.7) 435.2
---------------------- -------- -------- -------------------- --------------------- ------------------- --------
Non-current assets 26.9 91.4 - 7.9 - 126.2
---------------------- -------- -------- -------------------- --------------------- ------------------- --------
Section 4 - Income Statement Analysis (continued)
4.1 Segmental Analysis (continued)
The segment results for the year ended 31 December 2021 were as
follows:
Other Capricorn Group
UK Producing Energy adj for
Egypt Eastern Western Assets Group segments Total
US$m US$m US$m US$m US$m US$m US$m
----------------------- ------- -------- -------- ----------------- ---------------- ----------------- --------
Revenue 56.2 - - 411.8 0.9 (411.8) 57.1
Other income 7.3 - - - - - 7.3
Cost of sales (20.5) - - (103.8) - 103.8 (20.5)
Depletion and
amortisation (31.2) - - (35.3) - 35.3 (31.2)
----------------------- ------- -------- -------- ----------------- ---------------- ----------------- --------
Gross profit 11.8 - - 272.7 0.9 (272.7) 12.7
Pre-award costs (0.9) - (1.7) - (13.2) - (15.8)
Unsuccessful
exploration costs (2.9) (18.2) (29.5) - - - (50.6)
Impairment of
intangible
exploration/appraisal
assets - - (19.6) - - - (19.6)
Impairment of disposal
group property plant
& equipment -
development/producing
assets - - - (56.0) - 56.0 -
Other operating income - - - - 0.6 - 0.6
Depreciation -
purchased assets - - (0.1) - (0.2) - (0.3)
Amortisation -
right-of-use assets - - (0.1) - (1.9) - (2.0)
Amortisation of other
intangible assets (0.1) - (0.2) - (4.5) - (4.8)
Other administrative
expenses (0.1) - (0.5) - (50.5) - (51.1)
Operating
profit/(loss) 7.8 (18.2) (51.7) 216.7 (68.8) (216.7) (130.9)
Exceptional income -
India tax refund - - - - 1,070.7 - 1,070.7
Fair value loss on
deferred
consideration (7.2) - - - - - (7.2)
Gain on fair value of
financial asset - - - (8.1) 5.5 8.1 5.5
Interest income - - - - 0.2 - 0.2
Interest expense (2.8) - - - (0.3) - (3.1)
Other net finance
(expense)/income (0.3) - (55.4) (9.8) (5.8) 9.8 (61.5)
----------------------- ------- -------- -------- ----------------- ---------------- ----------------- --------
(Loss)/Profit before
taxation from
continuing operations (2.5) (18.2) (107.1) 198.8 1,001.5 (198.8) 873.7
Tax charge (4.2) - - - - - (4.2)
(Loss)/Profit for the
year from continuing
operations (6.7) (18.2) (107.1) 198.8 1,001.5 (198.8) 869.5
Loss on disposal of
discontinued
operations - - - (173.8) - 173.8 -
Profit from
discontinued
operations - - - - - 25.0 25.0
(Loss)/Profit
attributable to
equity holders of
the Parent (6.7) (18.2) (107.1) 25.0 1,001.5 - 894.5
----------------------- ------- -------- -------- ----------------- ---------------- ----------------- --------
Balances at 31
December 2021:
Capital expenditure 437.2 12.2 60.9 5.8 1.1 (5.8) 511.4
----------------------- ------- -------- -------- ----------------- ---------------- ----------------- --------
Total assets 525.3 29.4 289.6 - 1,402.1 - 2,246.4
----------------------- ------- -------- -------- ----------------- ---------------- ----------------- --------
Total liabilities 367.7 1.9 33.3 - 44.9 - 447.8
----------------------- ------- -------- -------- ----------------- ---------------- ----------------- --------
Non-current assets 403.0 28.9 66.8 - 4.6 - 503.3
----------------------- ------- -------- -------- ----------------- ---------------- ----------------- --------
Section 4 - Income Statement Analysis (continued)
4.2 Administrative and Other Expenses
Year
Six months ended Six months ended ended
30 June 30 June 31 December
2022 2021 2021
US$m US$m US$m
--------------------------------------------------------------- ------------------ ------------------ -------------
Administrative expenses - recurring departmental expenses and
corporate projects 21.4 21.0 43.4
Administrative expenses - costs of India tax refund 12.1 3.6 9.9
Other expenses - costs incurred on business combination - - 4.9
33.5 24.6 58.2
--------------------------------------------------------------- ------------------ ------------------ -------------
4.3 Finance Costs
Year
Six months ended Six months ended ended
30 June 30 June 31 December
2022 2021 2021
US$m US$m US$m
-------------------------------------------------------- ------------------ ------------------ -------------
Loan interest and facility fee amortisation 6.4 9.4 13.7
Other finance charges 0.3 0.1 0.2
Lease interest 0.1 0.1 0.3
Exchange loss recycled from Other Comprehensive Income - 39.4 54.7
-------------------------------------------------------- ------------------ ------------------ -------------
6.8 49.0 68.9
-------------------------------------------------------- ------------------ ------------------ -------------
4.4 Earnings per Ordinary Share
Basic and diluted earnings per share are calculated using the
following measures of (loss)/profit:
Year
Six months ended Six months ended ended
30 June 30 June 31 December
2022 2021 2021
US$m US$m US$m
--------------------------------------------------------------- ------------------ ------------------ -------------
(Loss)/Profit and diluted (loss)/profit after taxation from
continuing operations (73.5) (87.4) 869.5
Profit/(Loss) and diluted profit/(loss) attributable to equity
holders of the Parent 47.4 (100.2) 894.5
--------------------------------------------------------------- ------------------ ------------------ -------------
Section 4 - Income Statement Analysis (continued)
4.4 Earnings per Ordinary Share (continued)
The following reflects the share data used in the basic and
diluted earnings per share computations:
Year
Six months ended Six months ended ended
30 June 30 June 31 December
2022 2021 2021
'000 '000 '000
-------------------------------------------------------------- ------------------ ------------------ -------------
Weighted average number of shares 414,680 504,742 501,874
Less weighted average shares held by the ESOP and SIP Trusts (8,136) (6,653) (6,709)
-------------------------------------------------------------- ------------------ ------------------ -------------
Basic weighted average number of shares 406,544 498,089 495,165
Potentially issuable shares not included above:
LTIP awards 7,373 - 10,666
Approved and unapproved plans 971 - 17
Employee share awards 1,199 - 2,874
Diluted weighted average number of shares(1) 416,087 498,089 508,722
Potentially issuable shares not included above:
LTIP awards 22,484 29,954 18,575
Approved and unapproved plans - 2,523 2,298
Employee share awards 3,684 5,497 2,277
Number of potentially issuable shares 26,168 37,974 23,150
-------------------------------------------------------------- ------------------ ------------------ -------------
(1) The diluted weighted average number of shares applies only
to the discontinuing operations which generated a profit in the
period.
Section 5 - Taxation
5.1 Tax Charge on (Loss)/Profit for the Period
Year
Six months ended Six months ended ended
30 June 30 June 31 December
2022 2021 2021
US$m US$m US$m
--------------------------------------------------------------- ------------------ ------------------ -------------
Current tax charge:
Overseas corporation tax - Egypt 23.0 - 7.3
Overseas corporation tax - India 0.2 - -
--------------------------------------------------------------- ------------------ ------------------ -------------
Total current tax charge on (loss)/profit from continuing
operations 23.2 - 7.3
Deferred tax charge/(credit):
(Reversal of deferred tax charge)/Deferred tax charge on
recognition of financial assets -
UK (0.1) - 0.1
Deferred tax charge/(credit) on intangible/tangible assets -
Egypt 1.7 - (3.2)
--------------------------------------------------------------- ------------------ ------------------ -------------
Total deferred tax credit on (loss)/profit from continuing
operations 1.6 - (3.1)
--------------------------------------------------------------- ------------------ ------------------ -------------
Total tax charge on (loss)/profit from continuing operations 24.8 - 4.2
--------------------------------------------------------------- ------------------ ------------------ -------------
5.2 Deferred Tax Liabilities
Reconciliation of movement in deferred tax liabilities:
Temporary differences in respect of:
Intangible/tangible assets Losses Other temporary differences Total
US$m US$m US$m US$m
------------------------------------------ --------------------------- ------- ---------------------------- ------
At 1 January 2021 and 30 June 2021 - - - -
Deferred tax liabilities recognised on
business combination 52.5 (6.7) - 45.8
Deferred tax charge/(credit) through the
Income Statement - continuing operations 11.7 (14.9) 0.1 (3.1)
------------------------------------------ --------------------------- ------- ---------------------------- ------
At 31 December 2021 64.2 (21.6) 0.1 42.7
Deferred tax charge/(credit) through the
Income Statement - continuing operations 11.4 (9.7) (0.1) 1.6
Deferred tax charge/(credit) through the
Income Statement - discontinued
operations (note
6.1) - (13.5) 21.3 7.8
------------------------------------------ --------------------------- ------- ---------------------------- ------
At 30 June 2022 75.6 (44.8) 21.3 52.1
------------------------------------------ --------------------------- ------- ---------------------------- ------
Deferred tax liabilities analysed by country:
At At At
30 June 30 June 31 December
2022 2021 2021
US$m US$m US$m
------- --------- --------- -------------
Egypt 44.3 - 42.7
UK 7.8 - -
52.1 - 42.7
------- --------- --------- -------------
Section 6 - Discontinued Operations
6.1 Profit/(Loss) from Discontinued Operations
Sale of Capricorn's interest in the Catcher and Kraken Producing
Assets ("UK Producing Assets")
On 8 March 2021, Capricorn agreed to sell its interests in the
UK Catcher and Kraken producing assets to Waldorf Production UK
PLC.
Consideration under the agreement was an initial cash
consideration of US$425.0m, subject to adjustments for working
capital and other customary interim period adjustments, further
purchaser bonds of US$30.0m, sold shortly after completion, and
additional contingent consideration ("earn out consideration") from
2021 to the end of 2025 dependent on oil prices and minimum
production levels being met. 2021 earn out consideration of
US$75.7m, plus interest, was settled in June 2022. 2022-2025 earn
out consideration at 30 June 2022 had a risk-weighted fair value of
US$240.9m.
The financial performance of the discontinued operations is
expanded in the tables below for the periods ended 30 June 2022, 30
June 2021 and 31 December 2021 respectively.
Year
Six months Six months ended
ended ended 31 December
30 June 2022 30 June 2021 2021
US$m US$m US$m
----------------------------------------------------------------------- -------------- -------------- -------------
Revenue - 256.6 411.8
Cost of sales 1.5 (81.5) (103.8)
Depletion and amortisation - (35.3) (35.3)
Gross Profit 1.5 139.8 272.7
Impairment of disposal group - (144.6) (56.0)
Operating profit/(loss) 1.5 (4.8) 216.7
Profit/(Loss) on financial asset at fair value through profit or loss
- earn out consideration 127.2 - (8.1)
Finance costs - (8.0) (9.8)
----------------------------------------------------------------------- -------------- -------------- -------------
Profit/(Loss) before tax from discontinued operations 128.7 (12.8) 198.8
Taxation (7.8) - -
----------------------------------------------------------------------- -------------- -------------- -------------
Profit/(Loss) after tax from discontinued operations 120.9 (12.8) 198.8
Loss on disposal of discontinued operations - - (173.8)
----------------------------------------------------------------------- -------------- -------------- -------------
Profit/(Loss) from discontinued operations 120.9 (12.8) 25.0
----------------------------------------------------------------------- -------------- -------------- -------------
Earnings per Share for Profit/(Loss) from Discontinued Operations cents cents cents
------------------------------------------------------------------- -------- ------- ------
Profit/(Loss) per ordinary share - basic (cents) 29.74 (2.57) 5.05
Profit/(Loss) per ordinary share - diluted (cents) 29.06 (2.57) 4.91
------------------------------------------------------------------- -------- ------- ------
6.2 Cash Flow Information for Discontinued Operations
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2022 2021 2021(2)
US$m US$m US$m
-------------------------------------------------------- ----------- ----------- -------------
Net cash flows (used in)/from operating activities (11.1) 132.4 240.4
Net cash flows from/(used in) investing activities (1) 77.2 (6.4) (9.4)
Net cash flows used in financing activities - (26.3) (42.5)
Net increase in cash and cash equivalents 66.1 99.7 188.5
-------------------------------------------------------- ----------- ----------- -------------
(1) 2021 earn-out and interest payment received in June 2022
(2) UK operations for the period ended 2 November 2021
Section 7 - Share Capital
7.1 Called-Up Share Capital
Number 21/13p ordinary
Number 231/169p '000 231/169p ordinary 21/13p ordinary
ordinary '000 US$m US$m
Allotted, issued and
fully paid ordinary
shares
At 1 January 2021 589,718 - 12.6 -
Issued and allotted for
employee share options 99 - - -
Consolidation of shares (589,817) 499,076 (12.6) 12.6
Issued and allotted for
employee share options
post consolidation - 192 - -
-------------------------- ------------------------- ----------------------- -------------------- ----------------
At 30 June 2021 - 499,268 - 12.6
Issued and allotted for
employee share options
post consolidation - 61 - -
Share re-purchase - (2,482) - -
-------------------------- ------------------------- ----------------------- -------------------- ----------------
At 31 December 2021 - 496,847 - 12.6
Issued and allotted for
employee share options - 677 - -
Share re-purchase - (182,307) - (4.6)
At 30 June 2022 - 315,217 - 8.0
-------------------------- ------------------------- ----------------------- -------------------- ----------------
Share premium US$m
-------------------------- ------------------------- ----------------------- -------------------- ----------------
At 1 January 2021 490.1
Arising on shares issued
for employee share
options 0.5
-------------------------- ------------------------- ----------------------- -------------------- ----------------
At 30 June 2021 490.6
Arising on shares issued
for employee share
options 0.3
-------------------------- ------------------------- ----------------------- -------------------- ----------------
At 31 December 2021 490.9
Arising on shares issued
for employee share
options 3.8
-------------------------- ------------------------- ----------------------- -------------------- ----------------
At 30 June 2022 494.7
-------------------------- ------------------------- ----------------------- -------------------- ----------------
Capricorn completed a tender offer on 6 April 2022. Under the
terms of the tender offer, 171,073,128 ordinary shares were
purchased at the strike price of 223 pence per share. The total
value of the ordinary shares purchased was, therefore, GBP381.5m
(US$498.6m).
On 15 November 2021, Capricorn commenced a re-purchase programme
of GBP20.0m. This ran until the end of February 2022. A further
re-purchase programme commenced on 7 April 2022 of up to US$25.0m,
which completed in July 2022.
Glossary
Bbl - Barrel of oil
Bn - Billion
Boe - Barrels of Oil Equivalent
Boepd - Barrels of Oil Equivalent Per Day
Bopd - Barrels of Oil Per Day
CNH - National Hydrocarbons Commission of Mexico
GAAP - Generally Accepted Accounting Principles
IFRS - International Financial Reporting Standards
JV - Joint Venture
Kboepd - thousand barrels of oil equivalent per day
LTI - Loss Time Injury
M - Million
Mcf - million cubic feet
Mmscf/d - million standard cubic feet/per day
Mmbbls - Million Barrels of Oil
Mmboe - Million barrels of oil equivalent
OGA - UK Oil & Gas Authority
RBL - Reserves Based Lending (facility)
US$ - US dollar
Waldorf - Waldorf Production UK PLC
WI - Working Interest
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END
IR EAPNSEEXAEFA
(END) Dow Jones Newswires
September 06, 2022 02:00 ET (06:00 GMT)
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