TIDMCNE
RNS Number : 8689D
Capricorn Energy PLC
26 June 2023
FOR IMMEDIATE RELEASE 26 June 2023
CAPRICORN ENERGY PLC ("Capricorn" or "the Company")
Annual General Meeting Chief Executive's and Chair's
Statements
Randy Neely, Chief Executive of Capricorn Energy PLC and Craig
van der Laan, Non-Executive Chair, will make the following
statements at the Company's Annual General Meeting for shareholders
today at noon.
Randy Neely
As the Company progresses through its strategic review, the
focus remains to reduce costs, refocus our Egyptian operations, and
return excess funds to shareholders. Significant progress has been
made, namely:
-- Identifying and actioning a significant reduction in G&A
to right-size the overhead to the continuing business. We have
achieved an initial gross G&A reduction of at least US$35m on a
run rate basis with opportunities for further meaningful cost
savings being pursued. We will update shareholders on the scale of
further cost reductions at our half year results in September, but
we believe it will be possible to reduce annual gross G&A to
US$1.50/boe or less;
-- In Egypt, we have a renewed focus on increasing value by
optimising investment through influential collaboration with our
partners on well selection, prioritisation of liquids production
growth and exploring options to enhance fiscal terms;
-- All other assets outside Egypt are in the process of either
being divested or relinquished in as timely a manner as possible.
To date, we have exited Mauritania and have progressed the
potential sales process of our UK North Sea business; and
-- A significant return of capital targeting US$575m via a
US$450m special dividend paid in May, a further special dividend in
Q4 2023 of US$100m based upon certain factors, and a share buyback
of at least US$25m over the next twelve months, which is underway.
As at 23 June, a total of US$11m had been purchased under the
buyback.
Year to date production to the end of May has averaged 31,500
boepd (split 14,000 bopd and 98 mmcfpd). Our full year working
interest production guidance remains 32,000-36,000 boepd and we
expect an uplift in production in the second half of the year to
achieve this. At the end of May we had US$317m cash (net cash
US$191m after debt of US$126m), US$145m trade receivables in Egypt
(US$104m is overdue) and US$65m of trade payables and accruals.
*
As previously stated, 2023 capex guidance remains US$155-175m,
with the vast majority in Egypt.
The business in Egypt has solid assets and a committed team who
will collectively continue to work on a number of priorities over
the coming months with a focus on streamlining the organisation,
exiting international operations, improving relationships with our
partners and the Government in Egypt, amending our contracts in
Egypt and developing our strategy to maximise shareholder value
with a focus on shareholder returns.
Our strategic review continues but we have achieved a good level
of progress in a short time. We expect the review to be completed
in September and will provide details on our conclusions
accordingly. Our collective experience and strong relationships in
the Egyptian oil and gas industry positions us well to maximise
value for our shareholders.
The Company will announce half year results on 7 September
2023.
Craig van der Laan
There has been major progress at Capricorn in the five months
since the shareholders of the company overwhelmingly supported the
election of a new Board in February. The strategy of Capricorn has
fundamentally shifted to deliver shareholder value by focusing on
our promising Egyptian business, exiting high-risk exploration,
returning significant excess cash to shareholders and reducing the
excessive legacy cost base. In Randy Neely, we have found a new CEO
who brings deep experience of operating in Egypt and creating
significant value there.
Our first and foremost priority has been to reduce the costs we
discovered when appointed to the Board which were out of alignment
with the scale of Capricorn's business. We moved on this quickly
and outlined on 27 April some initial savings we had identified in
our first 85 days, highlighting that those initial savings were
just the start. The Board is committed to reducing G&A further,
and significantly, beyond the initial savings already identified so
that as quickly as possible our G&A is at a level which is
appropriate for the size of our business, supports rather than
erodes shareholder value generation and underpins our commitment to
our Egyptian business. We are at the moment actively engaged in
exiting a range of risky, non-core exploration activities, and that
does require a level of resource in the short term. We are
fortunate to have a CEO in Randy who is familiar with running a low
cost organisation. We believe it will be possible to reduce annual
gross G&A to US$1.50 / boe or less, and we will continue to
address every aspect of the Group's operations to identify
opportunities for savings. More detail on the roadmap to that goal
will be provided at the half year results in September.
The return of shareholders' capital which is surplus to the
requirements of the Company is also a pressing priority. We paid
US$450m in a special dividend in May and are committed to returning
a further conditional US$100m dividend as quickly as possible. We
have guided Q4 2023 for this return, taking into account the
various factors laid out in the Full Year Results statement in
April. As I outlined on 27 April, the factors which enable us to
release that additional amount are not conditions each of which
must independently be met to enable the release of the additional
US$100m, rather, they are factors to which the Board will have
regard as to the timing of the release of that amount. The Board
remains confident of our ability to release that amount and looks
to do so at the earliest point in time.
It remains our intention to release further surplus capital
moving forward, in addition to that already announced. This
includes a contingent payment from the sale of our Senegal business
due following first oil, which we intend to release in full to
shareholders as soon as practicable after it is received. The
release of the Senegal payment to shareholders is independent of,
and in addition to, the US$100m already announced. The precise
scale and timing of the Senegal payment will become clear later
this year or early 2024, and we will keep shareholders updated on
any developments. We will also provide updates on the variable UK
contingent payments, which are due to be received in annual
instalments to Q1 2026, and will review the opportunity for further
distributions in respect of these amounts.
Since the results announcement, Capricorn, with its partner, has
sustained a five-rig development drilling program in Egypt, focused
on the oil-rich BED area. Eight producer and water injector wells
have been drilled this year in the BED 15/16 area, following seven
successful wells drilled in the area in 2022, extending field
limits and reserves. A well in the Karam Field in the AESW
concession tested in May at rates of up to 4,600 bopd, the highest
flowrates encountered in a Capricorn well to date. Production is on
track to grow in the second half of the year.
Elsewhere, we have exited our Mauritania exploration position
and continue to pursue the potential sale of our UK business, and
will exit from our exploration projects in Mexico and Suriname.
It is these priorities that will enable us to achieve our
vision, which is to create strong cash flow and shareholder returns
from our considerable resource and reserve base in Egypt.
The Board also announces that it has appointed Hesham Mekawi as
non-executive Deputy Chairman. Hesham is an Egyptian national,
resident in Cairo, and long-time former country-head of BP in
Egypt. As Deputy Chairman, Hesham will be focused, within the
overall Board governance framework, on supporting and working in
close collaboration with Randy Neely, Capricorn's CEO, in his
efforts to address the Group's priorities in Egypt, and to support
Randy in the development and implementation of strategies for key
stakeholder engagement, advocacy and representation of the Board in
Egypt. Richard Herbert continues as Senior Independent
Director.
Ends
Enquiries to :
Analysts / Investors
Nathan Piper, Commercial Director Tel: 0131
475 3000
Media
Diana Milford, Corporate Affairs Tel: 0131
475 3000
Billy Clegg/Owen Roberts, Camarco Tel: 0203
757 4980
For further information on Capricorn please see:
www.capricornenergy.com
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