11 May 2022
Annual General Meeting Chief Executive’s Statement
Simon Thomson, Chief Executive of Capricorn Energy PLC, will make the following statement at the Company’s Annual General Meeting for shareholders today at noon.
The last twelve months have been transformational for Capricorn, with the delivery of two key strategic goals:
- Receipt of the India tax refund of US$1.06bn has allowed us to return US$500m to shareholders via tender offer and embark on a buyback programme of up to a further US$200m, whilst retaining significant net cash to drive expansion of the business.
- Completing the acquisition of our Egyptian assets from Shell delivered the first step in rebuilding our portfolio with a strategic emphasis on low cost, short capital cycle producing assets with a clear path to decarbonisation, supported longer term by infrastructure-led exploration.
We are pleased with the progress made in our Egyptian operations in the seven months since acquisition and continue to work with our respective JV partners to optimise the development programme and deliver growth. Notably, we have a near term focus on liquids production in the current strong oil price environment. We expect to deliver production within the previously stated guidance range of 37,000 – 43,000 boepd for 2022, with expected capital and operating cost guidance for Egypt also unchanged. We anticipate being towards the upper end of previously guided liquids percentage of production (35-40%).
Production is stable and we are executing new wells successfully, currently in the BED/Sitra and AESW concessions. There are three rigs currently operating with two more expected to be added over the summer. Work-over activity continues to reinstate and optimise production from existing wells and to complete new wells for production or injection.
Exploration in 2022 is focused on Egypt, the UK and Mexico, with much of this activity operated by Capricorn and targeting wells which can be rapidly commercialised if successful. In the UK, we expect to commence drilling the Diadem well in Q2 and are evaluating new 3D seismic data across our Southern North Sea acreage in preparation for a drilling decision later this year. In Egypt, Capricorn-operated drilling is expected to begin later this year in the South Abu Sennan concession, with 3D seismic acquisition taking place this year across the South-East Horus, West El Fayum and North Um Baraka concessions. Elsewhere, we expect to complete our final commitment well in Mexico (Block 7, operated by Eni) this year, and we are reviewing the next phase of investment together with partnering strategies in our acreage offshore Mauritania and Suriname.
Progress continues towards our accelerated net zero greenhouse gas emissions target of 2040 or earlier, with decarbonisation actions underway in our Egypt operations, including the replacement of diesel generation with cleaner burning gas and the centralisation of power and electrification. Capricorn’s role in the global energy transition is of particular importance to your Board, and recognising this, a Sustainability Committee has been established to provide oversight of our progress on energy transition and the broader environment, social and governance objectives of the Company.
Looking forward, our focus will continue to be on further expanding the producing asset base by delivering production growth in Egypt and by advancing our targeted exploration programme, whilst also pursuing value accretive strategic opportunities. The Company also expects to benefit from material contingent payments linked to oil price and production levels resulting from the terms of the divestments of its UK producing assets and Senegal development. From this position of strength, we aim to build on our differentiated track record of value creation which has seen us create, deliver and return US$5.5bn to shareholders over the last fifteen years.
The Company will announce half-year results on 6 September 2022.
David Nisbet, Corporate Affairs
Tel: 0131 475 3000
Linda Bain/Jonathan Milne, Corporate Affairs
Tel: 0131 475 3000
Patrick Handley/David Litterick, Brunswick Group LLP
Tel: 0207 404 5959