Capricorn Energy Plc · LSE:CNE
Capricorn Energy — H1 2023 Earnings Presentation
28 slides from Capricorn Energy's earnings presentation, Sep 14, 2023
Slide 1: Half-Year Results Presentation
Half-Year Results Presentation 14 September 2023
Slide 2: Disclaimer
H1 2023 Results Disclaimer These materials contain forward-looking statements regarding Capricorn, our corporate plans, future financial condition, future results of operations, future business plans and strategies. All such forward-looking statements are based on our management's assumptions and be
Slide 3: Agenda
Agenda Capital Return Craig van der Laan – Chair Introduction & Strategic Review Update Randy Neely – CEO H1 2023 Update and 2023 Guidance Nathan Piper – Commercial Director Matthew Bowyer – Technical Director Summary Randy Neely – CEO Half-Year Results Presentation, September 2023 3
Slide 4: Delivery on return of capital commitment
H1 2023 Results Delivery on return of capital commitment • Special dividend of ~$100m announced today • Expected to be returned to shareholders on 20 October 2023 • Company will seek to consolidate its share capital concurrent with the return • Circular, seeking shareholder approval, for the special
Slide 5: Introduction
Introduction Randy Neely CEO Half-Year Results Presentation, September 2023
Slide 6: Strategy conclusion: Business reset
Introduction Strategy conclusion: Business reset • Right-size organisation and cost base • Apply technical skills to production Strategy and development • Maximise value in Egypt • Comprehensive change in culture Delivering the new • Deepen partner and Government relationships organisation • Preserv
Slide 7: Delivery of an Egypt-focused, agile energy company
Strategic Review Delivery of an Egypt-focused, agile energy company Maximising Potential of Egyptian Assets • Developing long-term plan to grow value • More at detailed Operational Update 30 November 2023 in London • Improved PSC terms to incentivise investment Significant Cost Reduction • Material
Slide 8: Initial impressions
Strategic Review Initial impressions What I found • Highly skilled professional staff • Motivated and experienced Board • Strong balance sheet (inclusive of intended shareholder distribution) • Misaligned priorities ➢ Focus on exploration portfolio with misdirected strategy ➢ Lack of attention/skill
Slide 9: Future direction
Strategic Review Future direction Where we are going • Instil a culture of profitability and scarcity • Management compensation tied to share price • Egypt business must provide a return to our shareholders ➢ Egypt asset must be self-funded with no support from PLC for Capex, receivables funding or
Slide 10: Transforming the business and investment thesis
Strategic Review Transforming the business and investment thesis Stronger • Firmly establish Egypt as a business that provides strong returns to shareholders Cash Flow • Cash realisations from operations must exceed capital investment • Investments prioritised based on returns • Work collaboratively
Slide 11: Immediate Egypt Priorities
Strategic Review Immediate Egypt Priorities • Receivables collections a clear priority for management • Collaborate with our partner to be aligned on scale and speed of capital investment • Shift internal focus from exploration to production optimisation • Accelerate the turnover of exploration resp
Slide 12: Building a business in Egypt
Strategic Review Building a business in Egypt • Increasing domestic energy demand with a growing population of >110m people Egypt Receipts – $36 bn in FY22/23 • 100 year + industry history, proven basins with established infrastructure • Government open to constructive relationship with the O&G indu
Slide 13: Cost Reductions
Strategic Review Cost Reductions • Targeting to have one quarter of the workforce by YE 2023 versus 2022 • ~80% reduction in UK headcount by year end • Transformed structure and reduced senior positions • Smaller Board (7 now versus 9 in 2022) Group Headcount by Quarter 246 200 191 • Current year G&
Slide 14: Non-core update
Strategic review Non-core update Insert image International Exploration • Mauritania: Exited • Suriname: Moving towards relinquishment in Q4 2023 • Mexico: Exiting – target Q4 2023 • UK Exploration: Exiting – Q4 2023 Contingent payments • Senegal: Startup of production delayed to mid-2024. Contingen
Slide 15: Finance
Finance Nathan Piper Commercial Director Half-Year Results Presentation, September 2023
Slide 16: H1 2023 Financial Performance
Finance H1 2023 Financial Performance Production • Production: ~31,500 boepd average WI production, 44% liquids • Revenues from Egypt production: $100m Gross Profit from Egypt Operations Revenue • Oil price: $78.56/boe • Gas price: $2.95/mscf $71m* Opex • Opex: $4.82/boe on a WI basis Shareholder ca
Slide 17: H1 2023 Cashflows
Finance H1 2023 Cashflows 98 Receivables at 1 January 2023 • Build in receivables from $98m to $148m Payables at 1 January 2023 (15) • RBL redetermination ongoing • Working with partner on financing alternatives Receivables at 30 June 2023 148 Payables at 30 June 2023 (36) * Opening cash at 1 Januar
Slide 18: Guidance update – Significant cost reductions
Finance Guidance update – Significant cost reductions Minimising exploration spend in 2023 and no International exploration spend in 2024 and beyond 2023 Original 2023 Guidance Guidance H1 Actual Update Production Overall* 32 - 36 kboepd 31.5 kboepd ~32 kboepd Oil* ~13.9 kbopd ~14.5 kbopd Gas** ~99
Slide 19: Production update
Production update Matthew Bowyer Technical Director Half-Year Results Presentation, September 2023
Slide 20: Egypt 2023 Production Forecast
Production Egypt 2023 Production Forecast 2022/23 Actuals and 2H23 Production Forecast (NWI) 40 35 Production (kboepd) 30 25 20 15 10 5 0 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 E 4Q23 E Liquids Actual Gas Actual Liquid Forecast Gas Forecast (kbopd) (kboepd) (kbopd) (kboepd) 2022/23 Actuals and H2 23 Pro
Slide 21: 2023 Near Field Extension – Immediate Production Additions
Production 2023 Near Field Extension – Immediate Production Additions 1.2 3.0 Preliminary Post Drill 1.0 Pre Drill Volumes (unrisked) Volumes (recoverable) 2.5 Cumulative Cumulative mmboe (gross, cumulative) Pre Drill Post Drill 0.8 2.0 mmboe (gross) 0.6 1.5 0.4 1.0 0.2 0.5 0.0 0.0 BED A BED B BED C
Slide 22: Summary
Summary Randy Neely CEO Half-Year Results Presentation, September 2023
Slide 23: Market price implies no value for Egypt Production business
Finance Market price implies no value for Egypt Production business ** • Current market capitalisation of Capricorn implies the market is valuing the production base of Egypt at less than zero • Egypt has never defaulted on oil and gas A/R. They may pay late, but they have always paid Market Cap. $3
Slide 24: Conclusion
Summary Conclusion • Right-size organisation and cost base • Apply technical skills to production and Strategy development • Maximise value in Egypt • H1 ~$450m returned to shareholders • Further ~$100m to be returned in October Shareholder returns • Ongoing ~$25m share buyback • Expecting return of
Slide 25: www.capricornenergy.com
C Capricorn Capricorn www.capricornenergy.com
Slide 26: Appendix
Appendix Half-Year Results Presentation, September 2023
Slide 27: Contingent Consideration
Appendix Contingent Consideration Receivable Payable UK North Sea Egypt • Waldorf to pay Capricorn in respect of Catcher and Kraken: Oil price • Capricorn to pay Shell up to Production volumes $25m per year for 2021-24 in Subject to (Mmbbl) respect of the Egypt Annual average Total production 2023:
Slide 28: Net Zero Commitment in action
Appendix Net Zero Commitment in action Ongoing ESG commitment • MSCI upgrade to AAA status • Fugitive emissions • CDP upgrade to B from B- reduction • Phase 1 complete – 50% addressed • CCUS Phase 1 & 2 complete • Phase 3 commencing - site facility • Diesel generator feasibility rationalisation and