Shares of Edinburgh-based Capricorn Energy — formerly Cairn Energy — rose about 7% on Tuesday after it published an update on its trading performance together with guidance for 2022.
Capricorn said it has concluded all necessary steps under the rules of the India Taxation (Amendment) Act 2021 required for payment by the Government of India of a tax refund of S$1.06 billion and that payment is expected to be made in early 2022.
The Edinburgh firm said production from its Egyptian assets has increased about 8%.
Capricorn Energy CEO Simon Thomson said: “We are very encouraged by the initial operating performance of our newly acquired Western Desert Assets in Egypt, with production growth ahead of expectations.
“We look forward to accelerating cash flows from the assets whilst reducing their emissions profile.
“We are actively pursuing opportunities to grow our producing asset base within our strict capital allocation criteria.
“With balance sheet strength and financial flexibility, Capricorn enters 2022 positioned to make another significant capital return to shareholders with the company having concluded all required steps to enable payment of the India tax refund.”
On its planned return of capital to shareholders, Capricorn said: “With the tax refund from the Government of India due and active management of the asset portfolio in recent years, Capricorn is well positioned to continue delivery of its differentiated business model of returning value to shareholders whilst building sustainable cashflow generation and growth.
“As previously announced, Capricorn plans to return up to US$700 million of the India tax refund proceeds to shareholders.
“Having consulted with shareholders on the capital return options, Capricorn has determined that, to provide flexibility to its shareholders, US$500m will be returned by way of tender offer, whereby shareholders will be invited to tender some or all of their shareholding for purchase on terms that will be set out in a circular to be posted to shareholders.
“It is intended that the remaining sum of up to US$200m will be returned by way of an ongoing share repurchase programme to provide a continuing value-accretive return of capital to shareholders.
“Each of these returns is subject to shareholder approval.
“On 15 November, it was announced that the company would commence a buyback programme of an initial amount of up to £20m out of the planned US$200m programme.
“This was due to end on 31 January 2022 and has now been extended to run until the end of February 2022.”