Capricorn pays $450m divi despite Eygpt cash concern

Edinburgh-based oil and gas firm Capricorn Energy said “accounts receivable” from the Egyptian General Petroleum Corporation (EGPC) increased from $97 million to $144 million in the firm’s first half of the year, with $113 million overdue.

Nonetheless, Capricorn has stuck with its plan to return $575 million to shareholders in 2023.

The firm said it paid shareholders a $450 million special dividend in May with a further payment of $100 million expected to be paid on October 20, 2023.

“The receivables position owing from EGPC at the end of June is $144m of which $113m is overdue,” said Capricorn.

“The increase in amounts outstanding from EGPC is a key concern for the company and management will continue to work with EGPC to address this issue.”

Capricorn swung to a $62 million half-year loss from a $41 million post-tax profit a year earlier due to changing the way it accounts for non-Egyptian and exploration assets, with its net cash pile standing at $176 million at the end of June.

Capricorn, formerly called Cairn Energy, has endured a tumultuous recent history, with two aborted merger deals and a revolt by shareholders that ousted the company’s former executive leadership.

Capricorn Energy’s recently-installed CEO Randy Neely said: “Capricorn 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 organisation, focused on tight cost control, shareholder returns and maximising 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 maximise 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 organisation, maximising the potential of our Egyptian assets and the rationalisation 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 (general and administrative expenses), matching costs to the scale and priorities of the business and made significant progress in exiting all non-Egypt licences to focus capital and internal resources on the Egyptian portfolio.

Looking ahead, the company will focus on maximising 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.”