Capricorn Energy plc said it was considering alternative transactions while maintaining that its proposed merger with Tullow Oil & Gas plc would create a stronger and more resilient business.
PROPOSED MERGER
Announcing the company’s half year results, chief executive Simon Thomson said that the proposed enlarged group would have assets in Ghana, Egypt, Gabon and Côte d’Ivoire.
“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.
“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.”
FINANCES
The company recorded a fall in pre-tax operating losses to US$48.7 million (H1 2021: $87.4m).
Revenue nearly trebled to $137.4m (H1 2021: 500,000) while gross profit rose to $55.6m (H1 2021:500,000).
The group held net cash of $809m including $178m debt (H1 2021: $341.4m).
Capricorn also received the India tax refund of $1.06bn enabling the company to return more than $500m to shareholders.
Unsuccessful exploration costs rose to $28.7m (H1 2021: $14.9m) while the company also recorded an exploration/appraisal impairment of $24.5m.
Administrative costs increased to $33.5m (H1 2021: $24.6m).
PRODUCTION
H1 2022 working interest production averaged 35,500 boepd.
The company lowered full-year production guidance of 33,000 to 36,000 boepd (previously 37,000 to 43,000).
OUTLOOK
Capricorn’s Egyptian interests cover four main concession areas of Obaiyed (Capricorn 50% working interest), Badr El Din (50% WI), North-East Abu Gharadig (26% WI) and Alam El Shawish West (20% WI).
The company continues to increase production in Egypt and during Q4 2022 expects to start drilling the Yatzil prospect on Block 7 in Mexico.
Capricorn forecast full year net capital expenditure of $175-195m.
Development and production for Capricorn’s Egypt assets is $80-90m with the company expecting to increase production during H2 2022.
Drilling activity is underway following initial delays of the fourth and fifth rigs into Egypt and completion of BED compression project is scheduled by the end of the year.
The company expects to conduct 3D seismic programmes in Southeast Horus and West El Fayum concessions.
Capricorn has also started operated exploration drilling in South Abu Sennan.