Capricorn cuts costs by $35m

Capricorn Energy plc has reduced general and administrative costs by an initial $35 million as it continues to focus more on its assets in Egypt.

DIVESTMENTS

Chief executive officer Randy Neely added at today’s general meeting that the company would pursue “further meaningful cost savings.”

The cost-cutting measures also extend to Capricorn’s assets outside Egypt, which are in the process of either being divested or relinquished.

The company has exited Mauritania, progressed “the potential sales process” of its UK North Sea business, and will exit exploration projects in Mexico and Suriname.

Capricorn has also returned $450m special dividend paid to shareholders in May with a further special dividend due during Q4 2023 of $100m “based on certain factors”.

As at 23 June, a total of $11m had been purchased of at least a $25m buyback over the next 12 months.

PRODUCTION & FINANCES

In Egypt, year to date production to the end of May has averaged 31,500 boepd, comprising 14,000 bopd and 98 mmcfpd.

Capricorn’s full year working interest production guidance remains 32,000-36,000 boepd with expectations of an increase during the second half of the year to achieve the target figure.

At the end of May, the company had $317m cash (net cash $191m after debt of $126m), $145m trade receivables in Egypt, with $104m overdue, and $65m of trade payables and accruals.

The company’s strategic review continues and is expected to completed in September.

Capital expenditure guidance for 2023 remains $155-175m, with the vast majority in Egypt.

EGYPT OPERATIONS

Mr Neely said that the company would over the coming months streamline the organisation, exit international operations, improve relationships with partners and the Egyptian government, amend Egyptian contracts and develop a strategy to maximise shareholder value with a focus on shareholder returns.

Chairman Craig van der Laan added that Capricorn and its partner Cheiron had sustained a five-rig development drilling programme in Egypt, focused on the oil-rich BED [Badr El Din] 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 [Alam El-Shawish West ] 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.”