LONDON (ShareCast) - (Sharecast News) - Capricorn Energy reported robust production from its Egyptian assets in an update on Tuesday, as well as progress on exploration commitments, and ongoing tax and contingent payment disputes.
The London-listed company said it recorded revenue of $143m in 2024, with working interest production averaging 23,739 barrels of oil equivalent per day, including 44% liquids.

Production costs stood at $41m, or $4.6 per barrel of oil equivalent, while capital expenditure totalled around $60m.

Cash inflows from Egyptian operations reached $72m post-capex, contributing to a group net cash position of $23m.

That included $123m in cash and $100m in debt, supported by $135m in receipts from Egyptian operations.

Additionally, Capricorn noted its completion of a $25m share buyback programme in November.

In Egypt, the company said it continued development drilling in the Badr El Din (BED) area, focusing on the Abu Roash G (ARG) reservoir.

Exploration activity was set to resume in the first quarter of this year, with up to six wells planned across the West El Fayoum (WEF), South East Horus (SEH), and North Um Baraka (NUMB) concessions.

The initial well, WEF-1X, was scheduled to spud in February, targeting conventional objectives and testing the Abu Roash unconventional play.

Capricorn said it was also still in negotiations with its partner Cheiron and the Egyptian General Petroleum Corporation to improve production-sharing terms.

The company received a $50m contingent payment from Woodside in January related to its divestment of the Sangomar Field in Senegal.

However, the distribution of those funds was contingent on the resolution of a tax dispute with the Senegalese government.

The board said the dispute, focussed on capital gains and registration duties, remained unresolved, with the next court hearing set for February.

Capricorn was also pursuing the recovery of a $22.5m contingent payment from Waldorf Production related to the UK North Sea Columbus acquisition.

That amount could increase to $29.5m, the board said, if the acquisition did not complete by the end of the first quarter of 2025.

Discussions with Waldorf's secured creditors were ongoing.

Looking ahead, Capricorn said it planned to continue its development drilling programme in Egypt and evaluate merger and acquisition opportunities in the UK North Sea and MENA regions to diversify its asset base.

"I am delighted to report that our continued focus on financial and operational discipline in 2024 resulted in Capricorn achieving the top end of production guidance and a return to profitability," said chief executive officer Randy Neely.

"Throughout the year, we kept the market abreast of Woodside's progress with the Sangomar asset and were very pleased to confirm the receipt of $50m on 22 January.

"As previously guided, the company remains committed to returning any available proceeds of this contingent payment to our shareholders, the precise amount and timing of which remains subject to any disputed tax obligations."

Neely said that in 2025, the company would continue to focus on maximising the value from its self-funding Egyptian business unit, ensuring revenue from the assets provided the cash flow to sustain and eventually grow investment in country.

"Our ongoing negotiations to amend, extend and consolidate the terms of our production sharing contracts to support increased investment and strengthened returns continue to progress well and we expect this process to complete within the timeline guided in September 2024.

"Outside of Egypt, our priority is to develop the scale and longevity of the business to increase cash flows and deliver consistent shareholder returns."

Capricorn's objective, Randy Neely explained, was to diversify and expand operations by leveraging its core corporate capabilities to identify, acquire and exploit the right assets in the right locations.

"We are currently evaluating M&A opportunities in the UK North Sea and in the MENA region against a strict set of strategic, financial and returns criteria, and look forward to updating the market on our efforts when appropriate."

At 1021 GMT, shares in Capricorn Energy were down 0.95% at 316.47p.

Reporting by Josh White for Sharecast.com.

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