Release Date: March 27, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Capricorn Energy PLC (CRNCY, Financial) returned over $600 million to shareholders through dividends and share buybacks.
- The company achieved an 80% reduction in headcount and gross G&A from 2022 to expected expenditures in 2025.
- Operational improvements in Egypt have been significant, with a focus on enhancing production sharing contracts.
- Capricorn Energy PLC (CRNCY) exited 2024 with strong operational performance in Egypt, earning USD 105 million.
- The company is actively seeking new ventures in the UK North Sea and other regions to diversify and enhance its asset portfolio.
Negative Points
- Capricorn Energy PLC (CRNCY) faces challenges with receivables, which increased to $184 million by year-end.
- The company is unable to confirm a dividend due to financial uncertainties, including a $22.5 million expected payment from Waldorf that has not been received.
- There is an ongoing arbitration with the Senegalese government over taxes, which could result in a lengthy and uncertain outcome.
- Production in Egypt is expected to decline by 10% to 20% in 2025, despite significant investment in development.
- The macroeconomic environment, including the devaluation of the Egyptian pound, has negatively impacted financial performance.
Q & A Highlights
Q: Following the completion of the PSC renegotiations, what do you feel you can do with the assets in terms of production? Is it a matter of maintaining? Or is there scope for growth?
A: Geoffrey Probert, Chief Financial Officer: The renegotiated PSC terms underpin the portfolio by increasing contingent resources, which can move into reserves. We have a 40% annual decline rate that we've managed to arrest recently. While there is potential for growth, the focus for 2025 is to stabilize and grow production, despite challenges like shutdowns and exploration commitments.
Q: On the CapEx budget, can you provide a breakdown of the $85 million to $95 million between development activity and exploration commitments?
A: Geoffrey Probert, Chief Financial Officer: Approximately $9 million to $10 million is allocated for exploration commitments, with the remainder dedicated to development activity.
Q: If the former management team of Capricorn sold out of UK North Sea assets to enter Egypt, what is different today to suggest you can and should do the reverse?
A: Randy Neely, Chief Executive Officer: We are not proposing to sell out of Egypt to buy UK North Sea assets. Our strategy is to add UK North Sea assets to our portfolio, leveraging our existing structure without increasing near-term decommissioning costs. This approach aims to derive value without materially increasing our G&A.
Q: What will be the trigger from your point of view that will enable you or give you the confidence to commit more dollars to the ground in Egypt?
A: Randy Neely, Chief Executive Officer: We expect better payments going forward, as the new concession terms expand our investment portfolio. While we haven't seen a formal payment plan historically, we plan to control spending based on payment regularity. If payments slow, capital investment will be adjusted accordingly.
Q: After last year's reset of the production base and the operational issues seen in 2024, can you understand that investors are disappointed to see another production fall being predicted for this year?
A: Geoffrey Probert, Chief Financial Officer: The high decline rate and flattened activity levels contribute to the expected production fall. We exited 2024 at just over 21,000 barrels a day, and despite a month's worth of shutdown, we aim to maintain production within 1,000 to 2,000 barrels a day of our exit rate. The new concession agreement should help address these challenges in 2026.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
