 From: share price Angel EnergyDate: 23 May 2024 at 11:02:18 BSTCapricorn Energy (CNE LN) 192p, Market Cap £177m: Improvement in Egyptian receivablesCapricorn announced average YTD24 production is in line with the midpoint of 20-24kboe/d FY24 guidance, with an update on production performance to be provided later in the year.The Company reported receivables in Egypt have reduced from $169m to $151m enabling an improved net cash position of ~$101m as at end-April, ahead of settling a $25m contingent payment for Egypt to Shell.In Senegal, start-up of Woodsideâs Sangomar development by the end of June could lead to a potential contingent payment of up to $50m in 1Q25 if crude oil prices remain above $60/bbl in 2H24.A perfunctory update ahead of the AGM, which points to the positive impact of the improved fiscal landscape in Egypt that has seen $71m of receipts during 4M24.The Company wants to see the initial results of its drilling activities before updating the market, with this yearâs development activities expected to have a greater impact on 2025 production than 2024.Capricorn believes its market capitalisation implies that the underlying net asset value in Egypt are heavily risked, but we think management still has to demonstrate greater value from this stand-alone small-cap Egyptian producer than was available from the merger options to create a more balanced larger player preferred by the former management. |
So if I look at this from the AGM
"Since year end, Capricorn's cash position improved from $190m to $209m at 30 April 2024. Over the same period, receivables in Egypt have reduced from $169m to $151m, and debt drawn has reduced from $114m to $108m. Subsequent to 30 April, the Company has settled the $25m contingent consideration due to Shell related to the acquisition of the Egypt assets."
Its effectively saying as of 7th June 2024.
That the company has net cash of $26M ($209M - $50M dividend - $25M to Shell - $108M of debt) plus $151M of receivables its yet to receive.
Its also committed to spending $57M during the rest of 2024.
So in actual fact cash is going to be pretty tight for a quite a while - even when it gets a decent boost in early July for Q2 sales.
I guess the share price is being buoyed at the moment by the possible $50M Woodside payment even although they wouldn't receive it until early 2025 & then distribute it after that. With 72m shares in issue we're talking roughly £0.56 per share, which is a lot of cash relative to the market cap.
If there are any hiccups to the Egypt payments again, then they will have to cut-back on that cap-ex pretty darn quickly to ensure they have the cash to keep going (although they will get a little from the North Sea this time round to help sustain them & there admin costs are now much lower than before) so the burn rate will be much lower per month.
There's also only $12M left to pay to Shell in early 2025 & a bit more from Waldorf to come in to help off-set it.
In summary there cutting it pretty tight, I would have liked to see a little more wiggle room maybe $15 - 20M just to be on the safe side.
Not sure how they are going to be able to buy any more North Sea assets, unless the EGPC makes another hefty overdue receivables payments in the coming months. Issuing equity when its only effectively at current cash value ( & doesn't take into account Senegal payment or the value of Egypt embedded in the shares) would be daft & dilutive to everyone.
LOTM |
Strong confident AGM statement. Got the bit in their teeth. |
AGM on 24th May |
Blimey. I nailed that one! |
I'm truly Sorry to everyone who has bought in recently to MIRI, following me highlighting the company & asking people to take a look at it.
Yes I did know a fund raise was a possibility, but I didn't see it coming so soon & its slightly larger than the £5M max requirement that I thought they might needed.
The issue price is a disgrace quiet frankly, if that's the best the company can do with the pipeline of opportunities it has & all the hints its been giving through informal channels. The CEO has a lot of explaining to do & his position is in Jeopardy for sure after this, if not untenable.
Again my sincere apologies to everyone.
LOTM |
All the best with it LOTM. |
Hi nigelpm,
Finance is certainly a possibility & I made that very clear in all that I said, although there business plan has them with enough cash to the end of August.
Doesn't mean to say it will come in the form of a placing either, they could issue say a 15% 1 year loan note,or possibly borrow it, depending on where there break even expectation is & how much more cash is needed.
My current believe is that they will need less than £5M of cash to get to that point how much less depends on how the revenue side is doing.
Hopefully the Annual Report sheds some light on the matter & we get the end of March numbers & further guidance.
LOTM |
They are going to need more cash and soon from my very quick glance at recent RNS.
Wait for the placing/financing first. |
despite todays revelation "Production in 2024 is guided in the range of 20-24,000 boepd, 48% of which is forecast to be liquids"! |
Seems to have moved +50% in a month. |
We seem to be hitting an uptrend. However I'm still sitting on a massive loss. |
Thx LOTM!
Oh well we'll see what the results deliver. I look forward to reading your forensic analysis at that time :) |
Hi xxnjr, :)
Glad you looked in :)
I'm not sure what to make of today's announcement, it doesn't sound very encouraging at all, sounds like they have lots of unresolved issues still!
It's going to be really interesting to see in a month's time how much money they have actually received from the government of Egypt since September last year & how high the outstanding amount is compared to before, not to mention the overdue amount.
The only good thing happening (well assuming there isn't more bad news to come to knock the share price even more) is the fact the buy-back program has been able to buy-in a decent amount of stock each day recently.
Still nearly £4M to be spent which means there currently on course to have around 89.5M shares in issue when it completes - but even at the current rate of purchases that's mid to late June!
Market Cap is only just above that £100M mark.
Good Luck
LOTM |
Hi Last of the Mohicans,
Haven't looked in here for a while. Thanks for your continued analysis and running commentary. Walvis Bay was probably a tug refuelling stop + maybe a bit of R&R. BP's tug towed 'GTA FPSO' and 'Gimi' FLNG both stopped over at Walvis enroute for Senegal for hopefully a 3Q/24 start up which would be about 9 months late as pipelay vessel failed on that development.
CNE production as you say seems below previous guidance. Apache, or APA as they now call themselves, are no.1 onshore in Egypt (220K boepd gross) and their 4Q mentioned some constraints in availability of workover rigs in country to perform the recompletions/workovers required to mitigate decline.
Without more info from CNE it's difficult to say if decline is due to inherent reservoir issues or whether this is just a badly managed operation? Apache seem to be able to maintain their production fairly flat (on plateau) and have done so for years despite the in country headwinds. |
I took some today - an amazing fall but if (big if) Egypt can get at least partially resolved there's huge value here and leveraged value. |
Hi churchill2,
I hope you keep in touch :)
Did you ever look at IPEL ?
Hi Finkie,
From what I can gather there is hardly a PI left with shares in the company. I'm not sure what to make of it at all. I am in ways certainly tempted to buy some, but there are now 2 shorter's in the stock & another couple of companies I've bought recently with shorters in them haven't done well at all, so that's a real negative for me now & is making me very cautious about CNE especially when there is zero visibility.
The near 50,000 buyback yesterday was good to see :)
GLA
LOTM |
LOTM at 110p do you think a lot of this is in the news or has it become the basket case after distributing the india cash? |
Hi LOTM
I sold out a couple of weeks ago. Not one of my best investments. The turning point was I saw a reference to Egypt needing to borrow 25 billion dollars over the next four years to survive. Anyway thanks for all your good work over recent months and good luck with what ever decisions you make. |
Wow that was an awful auction for anyone still in the stock.
Hopefully the buy-back picked up at least 50,000 shares for the day with an average price of say £1.13
The 2 groups shorting the shares are sure raking in the £'s at the moment, the share price decline seems to have accelerated of late - no doubt in part because of them.
Market cap is down to virtually £100M now (a touch over £103 as it stands) who would have thought it.
So tempting to start picking up a few shares now at this price, but where is the sign of a bottom ? is £1 or less achievable/realistic ......
GLA
LOTM |
FPSO has now arrived at the Sangomar field.
So they will be able to start the process of anchoring it & then connecting all the cables & pipes etc to it.
Woodside's next report might be interesting for timelines, the end of April one certainly will be!
LOTM |
Hi churchill2
hmm I'm not sure I agree with you there, I think there is more than a 50% chance at this moment in time of them making the 30th of June date.
The FPSO has just come into range now & according to the marine traffic website is due in Dakar Offshore location on 10th Feb (its currently about to reach Guinea - Bissau)
As to Goldman's stake it jumps around all over the shop up & down like a yo-yo.
I see Citi & sold down there holding in the last few days, so maybe that's where all the shares are coming from.
Good Luck
PS if your looking for free money check out IPEL - but you need to do it quickly as it goes xd-dividend again next thursday
LOTM |
Hi LOTM
Thanks for the update. The share price is extremely depressing from the high hopes we had just a few months ago. Senegal is a non starter so the progress of the boat does not matter to shareholders in my opinion. Am I correct to assume Goldman are increasing their stake in Capricorn above fifteen per cent which seems odd considering the current situation. As I have said before Shell certainly saw us coming when they sold us this bag of worms.
The location of the boat does not really matter as Senegal is a non starter |
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