Capricorn Energy to pay $50mn special dividend

This new version of Capricorn Energy (CNE) has carried on with handing back shareholder cash as it settles in to life as a far smaller producer. The company will pay a $50mn (£39.4mn) special dividend in the second quarter, around 54p a share, following on from its $568mn in payouts last year as a result of India’s payment in 2022 to put a full stop to the Cairn India battle. 

Capricorn, after a series of failed deals, is now focusing on running assets in Egypt that produced 30,000 barrels of oil equivalent per day (boepd) last year. Sales in 2023 were $200mn, with an operating loss of $87mn. Guidance for this year is average production of 20,000-24,000 boepd, a significant drop. A new share in a UK gas project will provide around 400 boepd from closing, expected by mid-year. 

At the same time, the company is looking to actually get paid for its oil and gas by the Egyptian government. “In 2023, the company's receivables balance increased materially [from $96mn to $168mn], however, throughout my 12 years working in Egypt, and looking further back, the government of Egypt has always honoured its financial obligations to international investors,” said chief executive Randy Neely. The company did receive $30mn this week. 

Overall, however, the Egyptian government is in dire financial straits, with the International Monetary Fund (IMF) injecting yet more cash into the country earlier this month. “We still see value creation here as being entirely dependent on establishing a reliable payment system in Egypt to allow the business to operate,” said Stifel analyst Chris Wheaton. Capricorn still has plenty of cash, but this latest special dividend will leave it exposed if Egypt does not soon pay. Hold. 

Last IC View : Hold, 166p, 15 Sep 2023