Capricorn paid $5.5bn to shareholders in 15 years

The chief executive of Edinburgh-based Capricorn Energy told the firm’s AGM on Wednesday that the last 12 months have been “transformational” for the company as it finally received its India tax refund of $1.06 billion which allowed it to return $500 million to shareholders via a tender offer.

CEO Simon Thomson said Capricorn also embarked on a share buyback programme of up to a further $200 million “whilst retaining significant net cash to drive expansion of the business.”

He said Capricorn would pursue “value accretive strategic opportunities.”

Thomson said Capricorn — formerly called Cairn Energy — has returned $5.5bn to shareholders over the last 15 years.

The CEO said Capricorn completed the acquisition of its Egyptian assets from Shell which “delivered the first step in rebuilding our portfolio with a strategic emphasis on low cost, short capital cycle producing assets with a clear path to decarbonisation, supported longer term by infrastructure-led exploration.”

Thomson told shareholders: “We are pleased with the progress made in our Egyptian operations in the seven months since acquisition and continue to work with our respective JV partners to optimise the development programme and deliver growth.

“Notably, we have a near term focus on liquids production in the current strong oil price environment.

“We expect to deliver production within the previously stated guidance range of 37,000 – 43,000 boepd for 2022, with expected capital and operating cost guidance for Egypt also unchanged.

“We anticipate being towards the upper end of previously guided liquids percentage of production (35-40%). 

“Production is stable and we are executing new wells successfully, currently in the BED/Sitra and AESW concessions. 

“There are three rigs currently operating with two more expected to be added over the summer. Work-over activity continues to reinstate and optimise production from existing wells and to complete new wells for production or injection.

“Exploration in 2022 is focused on Egypt, the UK and Mexico, with much of this activity operated by Capricorn and targeting wells which can be rapidly commercialised if successful. 

“In the UK, we expect to commence drilling the Diadem well in Q2 and are evaluating new 3D seismic data across our Southern North Sea acreage in preparation for a drilling decision later this year.

“In Egypt, Capricorn-operated drilling is expected to begin later this year in the South Abu Sennan concession, with 3D seismic acquisition taking place this year across the South-East Horus, West El Fayum and North Um Baraka concessions.

“Elsewhere, we expect to complete our final commitment well in Mexico (Block 7, operated by Eni) this year, and we are reviewing the next phase of investment together with partnering strategies in our acreage offshore Mauritania and Suriname.

“Progress continues towards our accelerated net zero greenhouse gas emissions target of 2040 or earlier, with decarbonisation actions underway in our Egypt operations, including the replacement of diesel generation with cleaner burning gas and the centralisation of power and electrification.

“Capricorn’s role in the global energy transition is of particular importance to your board, and recognising this, a sustainability committee has been established to provide oversight of our progress on energy transition and the broader environment, social and governance objectives of the company.

“Looking forward, our focus will continue to be on further expanding the producing asset base by delivering production growth in Egypt and by advancing our targeted exploration programme, whilst also pursuing value accretive strategic opportunities.

“The company also expects to benefit from material contingent payments linked to oil price and production levels resulting from the terms of the divestments of its UK producing assets and Senegal development.

“From this position of strength, we aim to build on our differentiated track record of value creation which has seen us create, deliver and return US$5.5bn to shareholders over the last fifteen years.”

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Mark McSherry
Dalriada Media LLC sites are edited by veteran news journalist Mark McSherry, a former staff editor and reporter with Reuters, Bloomberg and major newspapers including the South China Morning Post, London's Sunday Times and The Scotsman. McSherry's journalism has also appeared in The Washington Post, The Guardian, The Independent, The New York Times, London's Evening Standard and Forbes. McSherry is also a professor of journalism and communication arts in universities and colleges in New York City. Scottish-born McSherry has an MBA from the University of Edinburgh and a Certificate in Global Affairs from New York University.