Capricorn Trims Operational Loss, Revises Production Guidance
Capricorn Energy has cut its operational losses for the first six months of the year, but has also cut down on its production outlook. The company reported operating loss of $37.4 million, down from $47.4 million reported in the first six months of 2021.
Capricorn, however, trimmed its full year production guidance to 33,000 boepd-36,000 boepd, down from previous guidance 37,000 boepd to 43,000 boepd.
“Almost one year since the acquisition of the Egypt business, we continue to make good progress and have been successful in prioritizing oil and liquids production growth while current commodity prices remain high,” said Simon Thomson, Chief Executive, Capricorn Energy.
Oil and gas revenue in Egypt in the first half of 2022 was $137 million, from net entitlement sales volume of 2.6 mmboe of which 41 percent was liquids. Oil sales averaged $110.9/boe and gas sales averaged $2.9/mcf.
Production costs over the period were ~US$33m, or US$5.1/boe (on a WI basis). Current estimates of total 2022 capital expenditure are US$175-195m.
The average oil price achieved is nearing $111 per boe. Gas price is essentially fixed under contract to EGPC. Total cost of sales for the period were $32.8m, with average production costs of $6/boe forecast across the full year.
On June 1, 2022, Capricorn Energy and Tullow Oil unveiled a proposed merger of equals to create a new company focused on responsible resource development in Africa.
The combination would create a stronger and more resilient business, with a pan-African upstream portfolio of material and diversified producing assets in, Ghana, Egypt, Gabon and Côte d’Ivoire, along with a portfolio of investment opportunities to deliver production growth. The new company would be one of the largest, listed independent African focused energy companies, with the financial flexibility to invest in and accelerate growth and will focus on shareholder returns with opportunities for significant value creation.
“The Board continues to believe that the proposed merger with Tullow can deliver significant long-term value for shareholders through creating a leading, Africa-focused energy company. The Board is also mindful of the impact of external factors and market conditions and is, as always, assessing all options to maximize value for shareholders. The company is exploring a number of expressions of interest relating to alternative transactions, and is engaging with those parties expressing interest to evaluate potential outcomes,” Thomson said.
Documentation in respect of the court sanctioned scheme of arrangement is expected to be posted to shareholders in Q4 ahead of a shareholder meeting, with completion targeted by year end 2022.
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