Capricorn Energy Share Discussion Threads

[last of the mohicans] 03/12/2023 01:05

I made my year end prediction's in post 119 on 28th October.

Sadly since then Capricorn have released several negative pieces of news, including yesterday's operations update.

They are meant to be open & transparent with there communications now, but sadly they are not as detailed as they should be in spelling things out for investors.

It has taken me several of there announcement to get a better understanding of what's being said between lines, or has been left out for a reason!

Sadly this is not going to be pleasant reading for many ........

The production miss is much great than you might initially think, originally production for the year was forecast to be 32,000 boepd with an exit rate of 34,000 boepd & increasing into early 2024.

Instead production is now forecast to fall from just 30,600 boepd at the end of October to @ 30,000 boepd for the year as a whole. That means production for November & December combined is going to AVERAGE just 27,010 boepd. Yes that's right 27,000 boepd ((30,000*365 - (30600*304)) / 61).

So this Miss isn't just the 2,000 boepd it appears to be on the surface ie 30,000 instead of 32,000. No the miss come the end of December is in actual fact 7,000 boepd. In other words Capricorn will enter 2024 with production over 20% below where it should have been.

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The announcement talks about more project delays & lower than expected new well contributions which is not a good sign.

It then goes on to add this very interesting bit "Capricorn is working closely with the Operator to assist it to focus on high-grading new well opportunities, deploying the appropriate scale of rig fleet to ensure effective exploitation of the asset base, and delivering the most efficient drilling campaign and optimised reservoir management.

They've talked about "high-grading" before but the new bit should be causing alarm on a number of fronts.

Its basically saying the operator is using the wrong rigs !

Now this could be one of 2 things, the operator is using cheaper lower powered rigs in the hope of saving money, which usually ends up doing the exact opposite, with breakdowns, controlling the wells while drilling higher pressure sections, damaging the productive formations etc. Or it could be them using far more powerful rigs than are actually needed & thus these are likely to be far more expensive to hire & them hiring more rigs than they need!

It all points to disagreements/friction with their partner Cheiron & EGPC !

Which is alarming considering Capricorn has just passed operatorship of all the licences it operated over to Cheiron !

The fact the D&P budget is unchanged from previous guidance, re-enforces my alarm at what's happened, it doesn't make sense at all. If you've had to push back all these well's then a large chunk of the D&P money should have been pushed back into 2024 as well until the work takes place.

So something is definitely not right there.

I'd go so far as to say CEO Mr Neely will be taking the same approach to Egypt as he has to the UK, I doubt the head of Egypt is still in a job along with several others in senior positions, if she is I'd say its highly unlikely that she's there much longer. Those at the top there clearly have no idea of what there doing recruitment wise. Which leaves you wondering how Capricorn functioned at all previously! when they were meant to be an operator & the staff capable of doing so.

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As to the financial numbers. Well the first key observation is this, why didn't they wait until Monday/Tuesday to put out this update ?

Because if they did they could have incorporate the end of November numbers instead, but there's a good reason they didn't want to do that !

There well below the $70M I was expecting for cash receipts in the 2nd half of 2023, now in part a little of that will go down to the lower production numbers but still $44M seems on the low side.

Receivables & Overdue payments both increased by @ $26M up to the end of October ( I had allowed for $50M for each to end of December). So no real progress so far in quickening up payments to us & they conveniently didn't give an updated payables number, so NO way of knowing the true net position!

Debt was reduced by $13M which will help to lower Capricorn's interest payments.

Now to the net cash balance of $45M down from $174.6M at the end of June (need to deduct @ $97M for the special dividend & @ $4.5M for the share buy-back (£13.255M-£9.7M to 31st Oct).

So that leaves $73.1M less the $45M cash balance which means $28.1M of existing cash was used up in the 4 months, plus the $44M of new cash receipts, ie total spend of $72.1M over 4 months.

I had 2nd half expenditure previously pencilled in for $120.1 - $130.1M, that figure will be wrong now because of lower opex costs etc.

There still saying $40-50M D&P, lets stick to $30M for G&A, Egypt loan interest $5M, lets cut Opex to $23M & $8.4M for the rest of the share buy-back (but I'm going to exclude $6M of that for now), gives us a new total of $102.4 -$112.4M.

So if we deduct total estimated spend for the 2nd half of this year ($102.4 -$112.4M) from that already spent $72.1M it leaves Capricorn with @ $30-40M to pay against a current cash balance of $45M.

Therefore they have enough cash to last them through the end of December.

Then it becomes very tricky indeed & they are at the mercy of EGPC & the payment that is due in January & whether it arrives on time or not because if it doesn't then how are they going to pay the $25M that is due to Shell ?

Even if it does arrive on time its going to be a lot smaller than I had previous forecast due to the considerable drop in production that's occurred.

Let's say the payment is enough to cover that $25M, they still need to have enough cash to get hem through to there next payment.

Now Waldorf are going to be due them a payment of @ $50M currently, but given the current situation at Waldorf I doubt they'll be paying that until the very last minute possible (if not beyond) so in my opinion that cash won't be going into the bank account until at least 31st March 2024.

Given the G&A spend of $6M for the 1st Qtr of 2024 not to mention Opex costs for the same period they will now simply run out of money.

I talked about borrowing some in my forecast, that is still possible, but the cost of doing so will be much higher, given the falling production profile (instead of a rising one) the Senegal legal position that arisen etc.

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In summary the next 5 to 6 month's are now going to be extremely difficult for Capricorn, because of falling production, there failure to deffer D&P expenditure into 2024 & much lower cash receipts because of the EGPC than expected (that $26M lower than my forecast is hurting big time now)

If the company could turn back the clock 3 months knowing what they know now they wouldn't have gone ahead with the $97M special dividend payment. They might have paid out 50% of it instead or delayed it into 2024, citing EGPC for the delay due to the failure to pay on time & having to constantly increase the amount of working capital currently require in the meantime until its resolved.

I'm not sure how much longer they will keep going with the buy-back there is still @ $7.5M to be spent on it to reach the minimum $25M they promised shareholders. I suspect there will come a time when it is halted temporarily (until the Waldorf payment is received for example or EGPC makes a back payment covering some of the overdue amounts).

There won't be room for any new D&P expenditure until that Waldorf payment is received & its just as well they've cut G&A by $50M from now on otherwise they'd be having to find another $4M a month from January just to keep going!

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I still see potential here, but the company has a lot of explaining to do to its shareholders & it really needs to do so soon, but it may not have all the facts itself yet to pass on !

I'm not sure what the big American banks / brokers see that we don't that keeps drawing more of them in to buying a stake in Capricorn.

If you offered me as many shares as I wanted to buy at £1.30 right now, I'd say thanks but no thanks. The answer would probably be the same at £1.20 until I know more facts. Yes that is a big difference from the current share price but in terms of market value it's only around $25M ( or the cash I was expecting them to have received but haven't & no its not in the receivables number instead, as that's kind of where I was expecting it to be end of October) .

Good luck all -

post now complete & ready for comment

LOTM

[last of the mohicans] 02/12/2023 02:23

post removed & re-done on next post due to being logged out & having to log back in & not wanting to lose all the added sections.

LOTM

[last of the mohicans] 01/12/2023 16:39

I'm still in shock this hasn't hit £1.30 today.

That announcement is starting to tie up some lose ends like while the buy-back program has been so timid virtually since it re-started, even although the stated aim was "to complete it by the end of the year"

The simple truth would appear to be that they need to keep that money on the books for the coming month's.

No delay to the D&P expenditure is a bit of a shock as well.

More later

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Hi Churchill2

You'll get my views on it over the weekend ......I'm be comparing it to that forecast I made for the coming months about 6 weeks ago

I mean all the US players are here now Citigroup included (see yesterday's RNS)

LOTM

[churchill2] 01/12/2023 16:34

Hi LOTM
I did tell you some months ago that Egypt was a bag of worms so it will be interesting to see what you make of the latest revelations and what value is credible. Has all this American interest been badly misplaced or is their still value to be had.

[yasx] 01/12/2023 15:20

xxnjr1 Dec '23 - 08:07 - 155 of 159
0 0 0
Egy.gov are cash short - hence the receivables issue here..


Same as Pharos.

[arja] 01/12/2023 09:51

sadly it has an awful looking chart with next support level at about 127 .

[retsius] 01/12/2023 08:53

Echoes of India?

[suetballs] 01/12/2023 08:38

Cripes - bet the new Board wished they'd left the old Board to it.
The previous offer for the company now appears attractive?
LOTM - good luck if you decide to get back in at some stage.
Suet

[last of the mohicans] 01/12/2023 08:21

Hi xxnjr,

Sadly there is more than just the receivable issue here. Its no wonder they cancelled the update & presentation for yesterday!

Now we know the reason behind it !

Honestly I'm surprise its not at £1.30 already & I will be doing a deep dive into all the numbers later, but there are 3 bad ones straight away in that update !

LOTM

[xxnjr] 01/12/2023 08:07

Egy.gov are cash short - hence the receivables issue here.

[last of the mohicans] 01/12/2023 08:02

That is not a good operations update that has been released this morning but the article doesn't appear here !

Sadly for those still invested here production well below guidance of just 30,000 boepd is going to send this much lower

More later

LOTM

[last of the mohicans] 30/11/2023 16:56

Hi suetballs,

Good luck to you to,

I'm totally out at the moment to, but I will be buying back in at the right time & price. As a see fabulous value & potential here.

LOTM

[suetballs] 30/11/2023 10:31

I sold out a few days ago - I only had a £2k holding left anyway.
Just got tired of the whole mess.
Good luck to those who remain.
Suet

[last of the mohicans] 30/11/2023 10:15

Well this should have been the day we were all looking forward to !

The update on Egypt, sadly its on hold for several more month's.

GLA

LOTM

[last of the mohicans] 25/11/2023 21:53

Company Website has been updated today to reflect the share ownership as at 17th November rather than 3rd November (that was a very quick update). It also crucially shows us the shareholdings the day before Goldman Sach's disposed of 4.6945% of Capricorn's shares.

This is name, new position, old position, number of shares & percentage owned of the 94.168M in issue at that date, ( Although I'm not convinced its totally accurate as seem to include stock they've borrowed & others don't)

Goldman Sachs collateral account 1 1 17,699,205 18.77% was (16.96%)
Newtyn Partners . . . . . . .. . 2 2 12,354,001 13.10% was ( 9.33%)
Palliser Capital . . . . . . ... 3 3 7,431,767 7.88% was ( 7.86%)
Kite Lake Capital Management . . 4 4 7,163,629 7.60% was ( 7.58%)
Irenic Capital Management . . .. 5 5 6,136,349 6.51% was ( 6.49%)
Dimensional Fund Advisors . . .. 6 7 4,154,447 4.41% was ( 4.49%)
Vanguard Group . . . . . . . .. .7 8 3,948,378 4.19% was ( 4.18%)

Total = 62.46% down from 67.29% on 3rd November & down from 62.59% on 20th October as well.

As you can see only 7 names this time round !

Bank of New York Stocklending . . 6 6,063,656 6.41% was ( 6.31%)
Bank of America Merrill Lynch . . 9 3,769,531 3.99 was ( 3.97%)

Are missing since 3rd November yet we know from Morgan Stanley's documentation that there holding never went down only up on 20th November ( it could be listed here under Bank of New York Stocklending instead if Morgan Stanley is part of that company)

Clarity is needed regarding why NO Merrill Lynch declaration of falling below 3% especially as they are carrying out the share buy-back


--------- 3rd November comments --------


Very little in the way of changes over the 2 weeks other the the significant increase in the Goldman Sachs holding that we knew about, an increase in Bank of New York stocklending & a drop in the Vanguard one.

Note the very slight changes in the other holding %'s is due to the effect of the buy-back over the 2 week period.


----------------- old stuff ---------

So we have a new name on the list Bank of New York Stocklending collateral account - No hiding what that account is all about going by its "STOCKLENDING" rather appropriate given how much stock is currently on loan to the 4 longs.

Madison Avenue Partners who were previously 5 6 6,233,034 6.55 have now left the building 20th October ( for now at least) - yet have not submitted any holding notice to say they are now below the 3% threshold.

Morgan Stanley don't show up on the list yet they only reached the initial threshold on 13th October 6,377,792 shares or 6.718569% & there has been no notice to say it's gone below 3% again

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Blackrock used to own 3.13% as of 8th Sept so they have clearly fallen below the 3% threshold since then, yet no notification of such has been issued to the co

Centiva Capital who had acquired the voting rights to 3.01% of the company around the 22nd Sept don't show on the list & we know Bank of America have a far larger holding in the company's voting rights than is listed above, but the record seems to only show shares owned not actual voting rights.

LOTM

[last of the mohicans] 24/11/2023 00:38

I know there's been so many but I'm guessing most of you didn't pay much attention to Wednesday afternoon & Thursday morning's holding announcements ?

If you had then'd you'd have seen the massive changes that occurred on Monday the 20th November. A day when all of 125,190 shares changed hands through the LSE & Capricorn themselves accounted for 13,531 of that volume.

On the 20th November Goldman Sachs reduced its actual physical shareholding in Capricorn from 13,196,084 shares to 8,773,980 in other words a sale of 4,422,104 shares. They also reduced there indirect holding from 5.48% of the company to 5.41%

So in total there holding went from 19.49% to 14.73% in just one day.

So where did those 4,422,104 shares or 4.6945% of the company go to ?

Well Morgan Stanley (who don't appear as such on the Major shareholders list) on Thursday morning reported that there direct holding in Capricorn had risen from 6.718569% to 8.478502% on that day an increase of 1.76%

So where has the other near 3% gone ?

We're yet to find out .......

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What's clear from all of the above is that the vast majority of daily trading in Capricorn shares is happening completely out of our sight - on the Dark web or where ever.

The LSE is totally irrelevant when it comes to Capricorn & that sadly is scary.

LOTM

[last of the mohicans] 21/11/2023 10:54

Hi finkie,

Yes the buy-back is still continuing & will do for some time. They still have about £6.3M to spend on it which is about @ $7.75M.

They should get around another 4M shares at these prices.

You'll be back in long before me then at £1.45 because I don't currently intend to be paying anything near that price for mine.

We also hit a new 52 week low, which we knew was coming.

LOTM

[last of the mohicans] 21/11/2023 10:47

Company Website was updated yesterday 20th Nov to reflect the share ownership as at 3rd November.

This is name, new position, old position, number of shares & percentage owned of the 94.391M in issue at that date, ( Although I'm not convinced its totally accurate as seem to include stock they've borrowed & others don't)

Goldman Sachs collateral account 1 1 16,030,686 16.96 was (12.23%)
Newtyn Partners . . . . . . .. . 2 2 8,816,666 9.33 was ( 9.29%)
Palliser Capital . . . . . . ... 3 3 7,431,767 7.86 was ( 7.83%)
Kite Lake Capital Management . . 4 4 7,163,629 7.58 was ( 7.55%)
Irenic Capital Management . . .. 5 5 6,136,349 6.49 was ( 6.47%)
Bank of New York Stocklending . .6 6 6,063,656 6.41 was ( 6.31%)
Dimensional Fund Advisors . . .. 7 7 4,239,865 4.49 was ( 4.47%)
Vanguard Group . . . . . . . .. .8 8 3,948,378 4.18 was ( 4.47%)
Bank of America Merrill Lynch . .9 9 3,769,531 3.99 was ( 3.97%)

Total = 67.29% up from 62.59% on 20th October

Very little in the way of changes over the 2 weeks other the the significant increase in the Goldman Sachs holding that we knew about, an increase in Bank of New York stocklending & a drop in the Vanguard one.

Note the very slight changes in the other holding %'s is due to the effect of the buy-back over the 2 week period.


-------------------------------- old stuff -------------------


So we have a new name on the list Bank of New York Stocklending collateral account - No hiding what that account is all about going by its "STOCKLENDING" rather appropriate given how much stock is currently on loan to the 4 longs.

Madison Avenue Partners who were previously 5 6 6,233,034 6.55 have now left the building 20th October ( for now at least) - yet have not submitted any holding notice to say they are now below the 3% threshold.

Morgan Stanley don't show up on the list yet they only reached the initial threshold on 13th October 6,377,792 shares or 6.718569% & there has been no notice to say it's gone below 3% again.
-------------------------------------
Blackrock used to own 3.13% as of 8th Sept so they have clearly fallen below the 3% threshold since then, yet no notification of such has been issued to the company.

Centiva Capital who had acquired the voting rights to 3.01% of the company around the 22nd Sept don't show on the list & we know Bank of America have a far larger holding in the company's voting rights than is listed above, but the record seems to only show shares owned not actual voting rights.

LOTM

[finkie] 21/11/2023 10:35

They are still buying shares through the buy back, I will be back in around 145p

[last of the mohicans] 21/11/2023 10:09

Just did a dummy trade for 5,000 shares & I can get them for £1.4824 but not interested at that price.

I have put in my 1st limit order but it's set for a lot lower than than.

GLA

LOTM

[last of the mohicans] 18/11/2023 10:32

Well I got a bit of a shock yesterday when I totalled up all my Capricorn trades.

1st thing on 6th October my CNE trading over recent months had led to an overall banked gain of £6,227.75 & I still had 16,666 post consolidation shares in my account which had a further unbanked gain of @ £858 on them.

By the time I had sold them & the other 39,334 shares I'd acquired since then, that gain of over £7,000 had turned into an overall loss of £2,999.49

If I hadn't got out of most of my holding at an average of close to £1.635 I'd be looking at an additional loss of at least £4,000 & rising by over £500 for each additional £0.01 fall.

If it goes to £1.50 as I'm pretty sure it will, that would have been another additional loss of £3250 ( So £7250 on top of the £3,000 I currently have)

I will be back in but only when the risk / reward looks right to me.

GLA

LOTM

[p6r0] 15/11/2023 23:18

It beggars belief that a legal contract negotiated between Capricorn and Woodside Energy ,is so one sided! Whoever advised and negotiated for Capricorn, should surely be made accountable?
It appears that all of the risk has been accepted by Capricorn (risk of non payment by Woodside if Senegal doesn't come on stream by an agreed arbitrary date! Yet any taxes payable from the sale of the PSC's is also born entirely by Capricorn.) It seems that this agreement was excellent for Woodside and appalling for Capricorn.
To be honest, I am surprised that there wasn't a larger reaction to the news, the fall in the share price would seem to indicate that the market doesn't consider that the Senegal tax authorities claim to be entirely legitimate?(Another India?)
I really hoped that there might be a change in fortune here after disposing of the previous BOD, but it appears that their legacy still lingers!

[last of the mohicans] 15/11/2023 23:02

churchill2,

This wasn't on the table last week, Woodside only notified them about the issue on 14th November (ie yesterday)

The postponement of the Egypt update has something to do with discussion with the Egyptian Authorities (according to the visible text in that article I posted about)

hxxps://www.oilandgasmiddleeast.com/news/capricorn-energys-egyptian-gamble-talks-with-authorities-delay-update

Sadly I can't access the rest of it :(

So 2 set-back inside a week :(

Plus the other thing I'm watching tied to Capricorn in some ways suffered a significant setback and it will be quite a few weeks before news on it now becomes available.

So I'm sitting on the sidelines now just watching to see how things develop, if it drops to a price where I like the risk reward again then I'll start to buy-back in, but until then there are just far to many unanswered questions for me. So I've taken a big hit £'s wise for now by getting out.

Good luck to you & everyone else in the meantime.

LOTM

[churchill2] 15/11/2023 20:18

At least it clears up the reason for the cancellation of the end of month update. Senegal has gone from a improbable payment from Woodside to Capricorn to a possible long drawn out legal saga over a disputed payment to their government.