# Capricorn Energy 2021 was a transformational year

- Link: https://www.directorstalkinterviews.com/capricorn-energy-2021-was-a-transformational-year/4121055845
- Published: 2022-03-08T07:36:57+00:00
- Author: Giles

**Capricorn Energy plc** (LON:CNE) have today provided full year results for the
year ended 31st December 2021.

> **Simon Thomson, Chief Executive, Capricorn Energy said:**
> “2021 was a transformational year for Capricorn; we continued to successfully 
> reshape our portfolio and achieved a positive resolution of our Indian tax dispute.
> From the proceeds of asset sales and the Indian tax refund we have committed to
> nearly US$1 billion of capital returns to shareholders in 2021 and 2022. We acquired
> an attractive portfolio of low breakeven oil and gas production in Egypt, where
> we are already delivering production growth and emission reductions, and which
> has significant further opportunities for value creation. We also retain the balance
> sheet capacity to further expand the production base through value-accretive acquisitions.
> We look forward to continuing to deliver our strategic aims in 2022 with a strong
> commitment to safety, social responsibility and our pathway to net zero carbon
> emissions by 2040.”

**Strategic delivery:**

 * Acquisition of Shell’s Western Desert production and exploration portfolio in
   Egypt with significant potential for production growth, operating efficiencies,
   exploration resources and decarbonisation

 * Retained balance sheet strength to enable further expansion of the producing 
   asset base through investment and acquisition

 * Contingent payments receivable from recent asset sales:

o  US$76m additional consideration due in H1 2022 from UK sale;

o  further UK payments in subsequent four years dependent on oil price and production
performance;

o  up to further US$100m receivable in 2023 or 2024 for Senegal sale dependent on
oil price and first production timing

 * High-graded exploration portfolio now focused on shorter capital cycle, infrastructure-
   led opportunities

 * Portfolio resilience to energy transition scenarios: carbon reduction initiatives
   underway with a pathway to net zero by 2040 at the latest; portfolio value resilient
   under the IEA’s STEPS, SDS and NZE scenarios

 * Resolution of the Indian tax dispute, resulting in receipt of a tax refund of
   US$1.06bn

 * Almost US$1bn committed to shareholder capital returns: US$257m special dividend
   in Q1 2021 following completion of Senegal asset sale; following the Indian tax
   refund, US$500m tender offer to close in April 2022 and ongoing share buyback
   programme of up to US$200m

**2021 Financial Highlights**

 * Year-end Group cash of US$314m; net cash of US$133m after debt drawn to fund 
   the Egypt acquisition of US$181m

 * Working interest Egypt oil and gas production of ~36,500 boepd, within guidance
   of 33,000-38,000 boepd; net entitlement production of 1.5mmboe

 * Revenues from Egypt production of US$56m: average realised oil price of US$77.8/
   bbl and gas price of US$2.9/mcf (average production cost US$6.0/boe)

 * Net cash generated from oil and gas production of US$185m

 * Net Group capital expenditure of US$66m

 * Operating loss of US$131m (2020 Restated: US$130m operating loss) from continuing
   operations

 * Profit after tax of US$895m (2020: Loss of US$394m), including India tax refund

**2022 Outlook**

 * Capital return of US$500m expected in Q2 2022 by way of tender offer to close
   in April, alongside ongoing share repurchase programme of up to US$200m, both
   subject to shareholder approval

 * Capricorn WI production to average 37,000-43,000 boepd with 2022 exit rates forecast
   to exceed top end of guidance range

o  Oil and condensate expected to comprise 35%-40% of production mix

 * Production costs forecast to be US$4.5 – US$5.5 boe

 * Current estimates of 2022 capital expenditure total approximately US$200m, including:

o  Egypt production and development expenditure of US$90-110m targeted at delivering
substantial production growth during 2022

o  Egypt exploration expenditure of US$30-35m to sustain the resource base

o  UK infrastructure-led exploration expenditure of ~US$40m, predominantly on the
Jaws and Diadem wells, with no further well commitments beyond 2022

o  Other international exploration of US$30-35m, principally in Mexico, with no 
further commitments beyond 2022 and any further investment contingent on farm-downs

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