Get all your news in one place.
100’s of premium titles.
One app.
Start reading
Insider UK
Insider UK
Business
Peter A Walker

Capricorn Energy appoints new chief executive

Capricorn Energy has appointed a new chief executive as its strategic review makes its first changes.

Randy Neely, former president and chief executive of Egypt-focused operator TransGlobe Energy is set to join on 1 June. Interim chief executive Chris Cox will leave after a handover period.

Results for the year ended 31 December 2022 also revealed some of the initial changes to be made as a result of the review that commenced in February following an activist shareholder-driven boardroom reshuffle.

The new board has now committed to return to shareholders all excess cash flow not required for areas of core operational focus, resulting in a return of capital of approximately $575m via a circa $450m special dividend, proposed to be paid in May, along with a further special dividend of $100m to be paid in the fourth quarter, and a share buyback of at least $25m over the next 12 months.

Meanwhile, cost saving programmes have been initiated, including initial gross administrative expenses reduction of at least $35m on a run rate basis, with other opportunities for further cost savings to be pursued in order to maximise cash.

Capricorn also plans to materially scale back all exploration spend outside Egypt and monetise, farm-down or exit all other exploration positions.

A process has commenced for a potential sale of the company's UK assets.

As previously-announced, this will cut the UK workforce to about 40 staff, with the business consequently now seeking smaller offices in Edinburgh.

“With fewer people, we will require much less office space and ancillary services,“ read a statement. “Capricorn will be moving out of its current office on Lothian Road as planned, but will not be moving into the new offices in Edinburgh which were outlined in last year’s annual report.

“The search for smaller, lower cost alternative office space in Edinburgh is now underway. Significantly smaller, low-cost premises will also be found in London for those limited activities which need to take place there.”

The focus is now on maximising the value of Egyptian assets by optimising investment, well selection and rig performance, while continuing to focus on liquids production growth and exploring options to enhance fiscal terms.

Revenues from Egyptian production were $229m during the period, with net cash generated from Egypt oil and gas production standing at $104m - comprising $129m net cashflow generated during the year and deferred consideration and settlements paid $24m.

Capricorn's overall operating loss after tax was $160m from continuing operations.

There were impairment charges of $43m on Egypt producing assets and $94m of non-Egypt unsuccessful exploration costs.

Profit of $109m from discontinued operations - from the increase in value of earnout from a sale of UK producing interests - was booked, however Capricorn also reported a loss after tax of $51m for the year.

Already during 2022, $529m was returned to shareholders in via a tender offer and share repurchase programme.

Year-end group cash and cash equivalents were $757m, with net cash of $597m.

Earnout consideration on the disposal of the UK Catcher and Kraken interests in relation to 2022 production and oil prices of $137m was received in the first quarter of 2023, while $77m of production earnout in relation to 2021 production was received in the second half of last year.

Craig van der Laan, who was appointed as chair of Capricorn Energy in February, commented: “The overwhelming shareholder vote in favour of the new board appointments underscored the expectations for change.

“Consistent with those expectations, we immediately commenced a strategy review after appointment - today, 85 days later, we are pleased to report our initial findings, which include five areas of decisive strategic action.

“These include a decision to make a material return of capital to shareholders; a significant cost reduction as part of a broader plan to preserve shareholder cash; the curtailment of expensive exploration activities outside of near field activity in Egypt; plans to improve the Egypt business; and a drive for a culture change across the company.

“Our review of strategy continues, and I look forward to updating shareholders on our medium to long term findings in the months ahead.

“As we look to enact positive change in the business, I am grateful for the support that we have been given by our new colleagues as we execute our strategy for the benefit of all of our shareholders.”

Don't miss the latest headlines with our twice-daily newsletter - sign up here for free.

Sign up to read this article
Read news from 100’s of titles, curated specifically for you.
Already a member? Sign in here
Related Stories
Top stories on inkl right now
One subscription that gives you access to news from hundreds of sites
Already a member? Sign in here
Our Picks
Fourteen days free
Download the app
One app. One membership.
100+ trusted global sources.