Capricorn Touts Maximizing Value of Egyptian Business in H1 Results

Thursday, September 14, 2023

In its Half-Year Results 2023 Capricorn Energy Chief Executive Randy Neely stated that the company “ended H1 2023 a very different business than at the start of the year. The company is on its way to becoming a much leaner organization, focused on tight cost control, shareholder returns and maximizing value from our Egypt portfolio. I was appointed Chief Executive in June of this year and, while in the early stages of the role, it is clear to me that we have a robust and achievable strategy to maximize the value in our Company.

“The strategic review introduced by the new Board in February has formed a clear roadmap to drive change; return excess capital to shareholders, right sizing the organization, maximizing the potential of our Egyptian assets and the rationalization of non-core exploration assets. Progress has already been achieved, specifically on the return of capital of approximately $575 million to shareholders in 2023; I am delighted to confirm that in addition to approximately $450 million returned in May and an ongoing share buyback, of which approximately $15 million has already been repurchased, shareholders will receive an unconditional special dividend of approximately $100 million in October 2023, subject to shareholder approval. We have also achieved a material reduction in ongoing G&A, matching costs to the scale and priorities of the business and made significant progress in exiting all non-Egypt licenses to focus capital and internal resources on the Egyptian portfolio.

“Looking ahead, the company will focus on maximizing the value of our Egypt business. We have taken the decision to accelerate the transfer of operations of our exploration assets to our joint venture partner Cheiron to achieve operational synergies and alignment with field development activity. This will allow the Company to focus its limited internal technical resources on production and development. Our management team is also preparing for a detailed Operational Update in November, when we will outline our plan for Capricorn’s future.”

Tawfik Diab, Chairman, Cheiron said: “Following the arrival of Randy, great progress has already been made in building a constructive partnership between Capricorn and Cheiron. There is alignment between us as we move forward with activities in the Western Desert for the benefit of the joint venture and Egypt.”

H1 2023 Operational and Strategic Highlights

Strategic:

• ~$450m special dividend paid in May with a further payment of approximately $100m expected to be paid on 20 October 2023
• General Meeting to be held on 5 October to approve return of cash to shareholders
• Targeting completion of the ~$25m share buyback by end of year, with ~$15m repurchased to date
• Prioritization of Egypt development and production operations
• Full exit of Mauritania exploration position
• Commencement of exiting all non-Egypt licenses
• 80% overall reduction in UK headcount by year end
• Targeting $20m run-rate G&A expenses once organizational restructuring complete
• Appointment of Hesham Mekawi as non-executive Deputy Chairman

Operational and Financial:

• Revenue in Egypt of $98m with realized oil price of $78.56 per boe and gas price of $2.95 per mmscf
• Accounts receivable from EGPC have increased from $97m to $144m over the course of H1, with $113m overdue
• Operating cost per boe of $4.82 on WI basis
• Balance sheet: Group net cash of $176m
• $77m Capex and general exploration costs during H1; $49m in Egypt and $28m across legacy international portfolio
• Eight wells drilled this year in Egypt oil-rich BED area with one flowing at initial rates of up to 4,600 bopd following testing in May
• Egypt H1 2023 WI production averaged 31,500 boepd

Outlook

• Full Year forecast net capital expenditure of $117-127m
• Egypt Development & Production $75-85m
• Egypt Exploration & Appraisal ~$12m
• Full Year production expected to be at the low end of guidance 32,000 to 36,000 boepd, exiting at ~ 34,000 boepd
• Non-core exits progressed: Mexico, Suriname & Mauritania
• Ultimate G&A target of $1.50/boe (<$20m annually)
• Transferring operatorship of Egypt exploration acreage to partner
• Teen field onstream
• Detailed Operational Update set for 30 November 2023 in London
• On track with our Net Zero pathway and supporting JV partners with decarbonization initiatives

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