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Capricorn sharpens Egypt focus, despite receivable woes


Capricorn Energy is stripping down its operational profile to focus on Egypt, but bills owed to the company are mounting in the North African state.

Following some poor exploration results in Egypt, the company has opted to accelerate the transfer of operatorship to its partner. This will leave it focused on managing production, which is facing some operational challenges of its own.

The company reported revenue of $98 million for the first half, based on an oil price of $78.56 per barrel of oil equivalent and $2.95 per 1,000 cubic feet of gas.

Over the six month period, the accounts receivable from Egyptian General Petroleum Corp. (EGPC) have increased from $97mn to $144mn. Of this amount, $113mn are overdue.

Capricorn has warned it is watching the receivables closely. Its capital expenditure plans are “being monitored to match incoming receipts”, it said.

© Supplied by TransGlobe
Picture shows; Former TransGlobe Energy CEO and president Randy Neely, now CEO of Capricorn. Unknown. Supplied by TransGlobe Date; 10/08/2019

Former TransGlobe Energy head Randy Neely became CEO of Capricorn in June. The executive said the company was “on its way to becoming a much leaner organisation, focused on tight cost control, shareholder returns and maximising value from our Egypt portfolio”.

Capricorn’s former leadership had attempted to carry out a merger with Israel’s NewMed Energy. Shareholder opposition forced change, with a new talk of returning cash.

Capricorn carried out a review earlier this year and has already paid back $575mn to shareholders. Neely said there would be a further special dividend in October of $100mn.

It has net cash of $176mn.

Production plans

Capex in the first half was $77mn, of which $49mn was in Egypt. For the full year, capex will reach $117-127mn.

“We have also achieved a material reduction in ongoing G&A, 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,” he said.

As part of its plans to cut costs, Capricorn has opted to accelerate the handover of operatorship on its exploration assets in Egypt to partner Cheiron Petroleum.

“This will allow the company to focus its limited internal technical resources on production and development,” Neely said.

Production during the first half to Capricorn averaged 31,500 boe per day. The company encountered a number of operational challenges in Egypt.

It started up the Teen project, several months late. It warned production would be at the lower end of guidance for the year, of 32,000-36,000 boepd.

Capricorn is exiting its assets outside Egypt, including in the North Sea and Mauritania.

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