Capricorn Energy Plc · LSE:CNE
Capricorn Energy — FY2022 Earnings Presentation
32 slides from Capricorn Energy's earnings presentation, Apr 27, 2023
Slide 1: 2022 Full Year Results and Strategic Review Update
Presentation of 2022 Full Year Results and Strategic Review Update 27th April 2023
Slide 2: Disclaimer
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 beliefs in the lig
Slide 3: Overview
Overview Craig van der Laan Chair
Slide 4: Introducing the new Board
Overview Introducing the new Board Craig van der Laan Chris Cox Hesham Mekawi Richard Herbert Independent Independent Non-Executive Chair Interim Chief Executive Non-Executive Director Senior Independent Director Maria Gordon Tom Pitts Catherine Krajicek * Erik B. Daugbjerg * Independent Independent
Slide 5: New Chief Executive
Overview New Chief Executive Randy Neely joins Capricorn on 1 June 2023 • Previously President and CEO of TransGlobe Energy Corporation; a very successful Egypt-focused business, including assets in the Western Desert • Highly experienced industry leader, delivering high- performing operations in Eg
Slide 6: 2022 in Review
Overview 2022 in Review India Tax Shareholder Corporate Year End Refund Returns Activity Cash • Resolution of Indian tax • US$529m returned to • Tullow combination: • Year end gross cash of dispute shareholders via tender Announced 1 June 2022; US$757m offer and share buyback terminated 28 October •
Slide 7: Strategic Review Priorities: First 85 Days
Overview Strategic Review Priorities: First 85 Days Significant Refocused Maximising Shareholder Driving Culture Cost Reduction Exploration Strategy Value from Egypt Change • Material G&A reduction: • Focus on short-cycle, rapid • Developing long term plan • Focusing on shareholder matching organisa
Slide 8: Work in Progress – Updates to Come
Overview Work in Progress – Updates to Come • Receivables position in Egypt • Egypt licence extensions and renegotiation of terms • Potential to address trapped cash • Review of business plan for Egypt • Final conclusions of strategic review • Capital Markets Day in Q4 2023 2022 Full Year Results Pr
Slide 9: Agenda
Agenda 2022 Update and 2023 Guidance Clare Mawdsley – Acting CFO Chris Cox – Interim CEO Strategic Review Update Chris Cox – Interim CEO Capital Return and Summary Craig van der Laan – Chair
Slide 10: 2022 Update and 2023 Guidance
2022 Update and 2023 Guidance Clare Mawdsley Acting CFO Chris Cox Interim CEO
Slide 11: 2022 Financial Performance
2022 Update 2022 Financial Performance* • 2022 production: ~34,200 boepd average WI production Production • 42% of production in respect of liquids • 2022 revenues from Egypt production: US$229m Revenue • 79% of revenue generated from liquids production • 2022 realised oil price: US$98.8/boe; realis
Slide 12: 2022 / Q1 2023 Cashflows
2022 Update 2022 / Q1 2023 Cashflows US$m 1,400 1,056 1,200 Total Gross 2022 G&A: US$70m (spread across Capex, Opex, Trade receivables outstanding 1,000 Pre-Award and Admin & BD) 800 67 15 137 137 (67) 97 600 (529) (16) (15) (33) (54) 646 (8) 597 (40) 31 March 400 2023 Year End 2022 net cash net cas
Slide 13: Egypt Cashflows 2022 / Q1 2023
2022 Update Egypt Cashflows 2022 / Q1 2023 Egypt Q1 2023* Egypt Cashflows 2022 16 (11) US$m (25) (40) (14) US$m (6) Revenue Opex Deferred Development Exploration Egypt Cashflows Collections Consideration Capex Capex Q1 2023 * Net cash outflow in Egypt in Q1 2023 due to the timing of cash collections
Slide 14: Restricted Cash and Conditions
2022 Update Restricted Cash and Conditions • As at 31st March 2023 gross cash of US$798m includes restricted cash of US$13m outside Egypt and a US$22m cash balance in Egypt (restricted due to debt covenants) • Restricted cash balances in Egypt can be used freely to grow the business in country: • De
Slide 15: 2023 Full Year Guidance
2023 Guidance 2023 Full Year Guidance • Overall Production (WI)* 32,000 – 36,000 boepd Production • Oil & Condensate (WI)* 14,000 – 16,000 boepd • Gas Production (WI)** 100 – 112 mmscf/d Opex • Full year opex guidance ~US$5-7/boe • Egypt Development & Production • Multiple rig programme in 2023 (dri
Slide 16: Strategic Review Update
Strategic Review Update Chris Cox Interim CEO
Slide 17: Cost Reduction – Initial Conclusions
Strategic Review Cost Reduction – Initial Conclusions • Matching cost base to activity set on an ongoing basis • Identified G&A reduction of at least US$35m • >50% reduction on 2022 spend • Central costs • UK headcount reduction: Reducing from ~160 to ~40 employees • Rationalised senior management p
Slide 18: Initial G&A Savings Identified to Date
Strategic Review Initial G&A Savings Identified to Date G&A savings of at least US$35m (>50% of 2022 gross G&A spend) have been identified: • Full impact of benefit in 2024 • 2023 costs to be inline with 2022: cost savings offset by restructuring and transition costs in year • UK headcount consultat
Slide 19: Exploration – Refocus Strategy on Egypt; Minimal International Spend
Strategic Review Exploration – Refocus Strategy on Egypt; Minimal International Spend Focus on • Lower capital rapid payback, • Energy hungry market lower cost • Matches organisational capability onshore Egypt • Satisfy existing exploration commitments • Mauritania (90% WI) / Suriname (100% WI) • Pr
Slide 20: Egypt – Initial Observations
Strategic Review Egypt – Initial Observations • Advantaged asset base in an energy hungry domestic and regional market • Supportive jurisdiction for oil and gas development • Low cost onshore production • Diversified portfolio • Development and short-cycle exploration growth potential • Value optimi
Slide 21: Egypt – 2023 Production Forecast: Targeting Growth
Strategic Review Egypt – 2023 Production Forecast: Targeting Growth 2022 Actuals and 2023 Production Forecast YoY increase in liquids production - Decline in gas 2023 Liquids and gas growth 250 37 35 35 35 37 35 35 37 37 37 40 34 34 33 33 33 32 33 33 32 30 32 31 32 31 200 Gas (mmscf/d) 30 150 32 – 3
Slide 22: Egypt – 2022 Reserves and Upsides
Strategic Review Egypt – 2022 Reserves and Upsides: Material Future Upside Identified 2P Reserves ~65 mmboe (WI) / 27.2 mmboe (EI) 2P Reserves 2C Contingent Resources (mmboe) (mmboe) • Reserves at year-end 2022 after -4.7 mmboe production Working Net Working Net and -5.5 mmboe technical revisions In
Slide 23: 2023 Near Field Extension – Surpassing Pre-drill Expectations
Strategic Review 2023 Near Field Extension – Surpassing Pre-drill Expectations • Early year 2023 appraisal / NFE Wells exceeding NFE Well C NFE Well B expectations and reserve additions to be 32m Net Pay 11m Net Pay quantified at year end • Pay encountered at multiple levels in new wells • Encounter
Slide 24: Egypt – Key Priorities
Strategic Review Egypt – Key Priorities Stronger • Firmly establish Egypt as a business providing stronger Cash Flow cashflows to the Group Production • Grow liquids, gas and boe production and strong reserves Growth replacement for sustained growth • Sustainable improvements in drilling Optimisatio
Slide 25: Summary
Summary Craig van der Laan Chair
Slide 26: Summary Initial Conclusions and Actions: First 85 Days
Summary Initial Conclusions and Actions: First 85 Days Significant identified G&A reduction to ensure ongoing cost base matched to activity set Exploration to be focused on Egypt short-cycle, rapid payback opportunities Clear plan to create a lean, high performing organisation focused on optimising
Slide 27: ~US$575m Return of Capital
Strategic Review ~US$575m Return of Capital • Special dividend of ~US$450m announced today • Expected to be returned to shareholders in May 2023 • Company will seek to consolidate its share capital concurrent with the return • Circular, seeking shareholder approval, for the special dividend and shar
Slide 28: Egypt Western Desert Information Pack
Egypt Western Desert Information Pack: FY 2022 Actuals and FY 2023 Guidance April 2023
Slide 29: Egypt – Delivery of Drilling and Seismic Programme Commitments
Strategic Review Egypt – Delivery of Drilling and Seismic Programme Commitments • Six well campaign started across three operated concessions in 2023 Alexandria • Seman-1 drilling in SAS • Saqr-1 P&A with good sands but wet • 1,500 km2 of new wide azimuth broadband 3D seismic acquired in Egypt 2022
Slide 30: Egypt FY 2022 Production Actuals
Egypt Western Desert Information Pack Egypt FY 2022 Production Actuals 2022 Production Actuals North NEAG NEAG Obaiyed NUMB BED Sitra NAES AESW TOTAL Matruh Tiba Ext. Production Production/day - WI boepd 10,629 1,013 0 11,017 4,660 97 903 1,327 4,583 34,228 Entitlement production/day boepd 3,706 413
Slide 31: Egypt FY 2023 Production Guidance
Egypt Western Desert Information Pack Egypt FY 2023 Production Guidance Indicative split by area based on mid case of 32,000 to 36,000 boepd production and $100-$120m capex guidance 2023 Production Guidance North NEAG NEAG Obaiyed NUMB BED Sitra NAES AESW TOTAL Matruh Tiba Ext. Production Production
Slide 32: www.capricornenergy.com
Capricorn www.capricornenergy.com