Many investors won’t have heard of it, but Caracal Energy (CRCL) was one of the biggest oil companies to list in London last year. Poor demand from institutions and a somewhat chequered history - it bribed a foreign public official under previous management - forced the company to drop plans to raise $150m (£90m) at the time of July's initial public offering. But Caracal returned to equity markets in December and successfully raised $203m.
It's now based in Calgary, Canada, but its operations are in Chad - one of the poorest and most corrupt countries in Africa, according to Transparency International. Caracal started producing oil from its licences there in September and ended 2013 with gross production of around 10,000 barrels per day (bopd). It is targeting gross average production of 22,000-26,000 bopd this year. Indeed, the company booked its first revenues last month after completing its maiden oil shipment to joint venture partner Glencore, which explains the amplified financial loss in 2013.
Caracal’s share price fell sharply in March, however, after announcing plans to merge with Egypt-focused oil producer Transglobe Energy (TSX: TGL). The all-share deal will give Caracal access to Transglobe’s $302m cash pile and strong cash flow generation, which will help pay for drilling related to production expansion and exploration.
Broker Canaccord Genuity forecasts pre-tax profit of $70m in 2014, giving EPS of 48¢, rising to $379m and 251¢ in 2015 (pre-merger).
CARACAL ENERGY (CRCL) | ||||
|---|---|---|---|---|
| ORD PRICE: | 344p | MARKET VALUE: | £505m | |
| TOUCH: | 344-346p | 12-MONTH HIGH: | 519p | LOW: 336p |
| DIVIDEND YIELD: | NIL | PE RATIO: | NA | |
| NET ASSET VALUE: | 266¢ | NET CASH: | $42m | |
| Year to 31 Dec | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢)* | Dividend per share (¢) |
|---|---|---|---|---|
| 2012 | nil | -69 | -59 | nil |
| 2013 | nil | -85 | -72 | nil |
| % change | - | - | - | - |
£1=$1.67 *Fully diluted EPS | ||||
