Capricorn in $144m loss as shareholders get $568m

Edinburgh-based oil and gas firm Capricorn Energy said on Thursday its loss after tax more than doubled to $144 million as revenue fell about 12% to $201 million in the year ended December 31, 2023.

Nonetheless, Capricorn Energy, formerly called Cairn Energy, said it paid $568 million to shareholders in 2023 and is also proposing a special dividend payment of $50 million in Q2 of 2024 “accompanied by a share consolidation, subject to shareholder approval.”

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

Capricorn’s share price rose almost 5% on Thursday — but the stock is down about 75% for the past 12 months.

The firm said on Thursday it has “right sized the organisation” with a 80% UK headcount reduction.

Capricorn Energy CEO Randy Neely said: “In the last year, the renewed board executed multiple strategic initiatives to transform Capricorn: cost reduction programmes, focusing the corporate opportunities portfolio on Egypt and changes to the culture of the business, which we continue to push through.

“Alongside this strategic refresh, the board made returning capital to shareholders a core business objective, returning ~$568m in 2023. Additionally, I am delighted to announce that we are proposing a $50m special dividend to be paid in Q2 2024, subject to shareholder approval.

Significant progress was made in 2023 in exiting our non-Egypt exploration licences in Mexico, Mauritania and Suriname. We settled our remaining earnout considerations due from Waldorf Production Ltd (Waldorf) in exchange for a $72.5m payment and 25% working interest (WI) in the Columbus gas field (subject to completion), maintaining an ongoing presence in the UK North Sea.

“There remains the potential of a contingent payment from Woodside Energy’s (Woodside) Sangomar Field Development in Senegal.

We remain committed to the potential of our Egypt assets and believe that Egypt is a strong jurisdiction for oil and gas companies to do business. In 2023, the company’s receivables balance increased materially, however, throughout my twelve years working in Egypt, and looking further back, the Government of Egypt has always honoured its financial obligations to international investors.

“Our relationships with both our joint venture partner, Cheiron, and the Egyptian General Petroleum Corporation (EGPC) continue to build upon a strong foundation as we manage the Egyptian portfolio through a cooperative and collaborative approach.

“Additionally, the Company continues to engage with EGPC regarding a potential amendment to the terms of our Production Sharing Contracts (PSCs) – a key catalyst in unlocking value from our Egypt assets.

Looking ahead, we are actively working with our partner to maximise the potential of our Egyptian portfolio and progress amendments to the PSCs that support increased investment and strengthened returns.

“We are confident that the receivables position will improve in the coming months, supported by the Q1 2024 announcements of the UAE investment deal on the Egyptian north coast and the International Monetary Fund loan, as well as financial support package pledges from the EU and World Bank.

“We are also pleased to announce that Capricorn received payment of $30m from EGPC this week, further demonstrating the improving fiscal landscape.

“By focusing on production and development opportunities to provide sustainable, best in class returns, and deepening our relationships with our partner and the Egyptian Government, our renewed team will ensure that Capricorn advances confidently and successfully in 2024 and beyond.”