Shares of Edinburgh-based oil and gas firm Capricorn Energy rose as much as 7% after it published results for the six months ended June 30, 2024, saying that following “material cash collections in Egypt” it has resumed investing in the country.
Capricorn reported first half revenue in Egypt of $80 million and a “material improvement of collections against Capricorn’s Egypt accounts receivable since YE/23 with cash receipts of $93m in H1/24 compared to $50m in H1/23.”
The firm said Egypt receivables due “have reduced from $169m at YE/23 to $155m at H1/24, with a further ~$20m received to date Q3/24.”
Capricorn Energy, formerly called Cairn Energy, has experienced a tumultuous recent history, with two aborted merger deals and a revolt by shareholders that ousted the company’s former executive leadership.
In its 2024 outlook, Capricorn said: “FY24 production expected to meet guidance of 20,000 – 24,000 boepd, reflecting robust asset performance and the resumption of development drilling. Average production to date of ~24,700 boepd.
“Full year forecast capital expenditure of $50-60m following the resumption of drilling, with opex expected to average <$6 per boe …
“Continue to actively evaluate opportunities to create shareholder value in the UK North Sea.”
Capricorn Energy CEO Randy Neely said: “I am delighted to report that Capricorn’s clear value opportunity offering has been confirmed by the company’s production performance in Egypt indicating that we are on track to meet guidance targets for the full year.
“Maximising the value of the company was the driving force behind the wholesale restructure of the business early last year, and this strategy has transformed Capricorn into the cash flow focused energy producer it is today.
“Following material cash collections in Egypt, we have resumed investing. A key catalyst in improving production and unlocking value from these assets will be an amendment to the terms of our Production Sharing Contracts (PSCs) and we are formally engaged with our operating partner, Cheiron, and the Egyptian General Petroleum Corporation (EGPC) to achieve this.
“We were pleased to meet with Egypt’s new Minister of Petroleum & Mineral Resources, Karim Badawi, who has publicly outlined his intent to improve the investment environment to boost oil and gas production in country. We also met with the newly appointed Cheiron CEO and look forward to working together on this mutually beneficial objective.
“We welcome the consistency of regular payments received from EGPC to date in 2024, improving the company’s financial position and reinforcing our assertion that the Egyptian government honours its financial obligations.
“This gives us confidence that Capricorn will continue to collect receivables as we move forward with a focus on production enhancement, asset optimisation and value creation.
“With a strong balance sheet and up to $72m of contingent and deferred receipts due in the months ahead, the company moves into H2/24 with positive momentum as we prioritise opportunities for further shareholder returns and to create value in the UK North Sea, supported by our Egyptian asset base.”