Capricorn Energy Share Discussion Threads

[churchill2] 05/1/2024 17:55

Would guess it is not being towed. It’s a converted VLCC so presumably it has an engine but what do I know.

[last of the mohicans] 05/1/2024 04:13

Capricorn got a massive downgrade yesterday, very surprised the share price didn't react more.

Jefferies cuts Capricorn Energy to 'hold' (buy) - price target 160 (225) pence

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xxnjr,

The Léopold Sédar Senghor is travelling much faster than that, seems to be averaging around 9.5 knots & is already over half way to Madagascar, will likely pass the southern edge of it by next Monday.

I'd say at this rate it will reach Senegal around the 1st week of Feb.

What needs to be done with it after that to get it fully ready for use is anyone's guess.

GLA
LOTM

[xxnjr] 27/12/2023 08:27

"Woodside Energy has achieved another significant step forward for the Sangomar Project with the sail away from Singapore of the Léopold Sédar Senghor Floating Production Storage and Offloading (FPSO) facility. The FPSO, named after Senegal’s first president, is travelling 12,000 nautical miles....."

Let's assume it's being towed and averages 7 knots = 168nm/day.
Approx 70 days for 12,000nm. May arrive mid-March.

see

[churchill2] 22/12/2023 16:23

It’s difficult to guess where the share price is going. The purchase of its own shares seems to have been suspended for the time being. The market seems to approve of the Waldorf deal and the shares have bounced significantly. So what next are the Egyptian assets sellable? Have we any tax losses Capricorn can exploit? Are there any other oil companies we could do a deal with to benefit both parties. Or is it all going pear shaped after Christmas. I wish I knew!

[last of the mohicans] 19/12/2023 12:28

Hi churchill2,

Nah, production has been much higher than expected & recoverable reserves to.

Enquest delayed drilling more production wells at Kraken (originally planned for 2023). They announced the other week that they are going to drill 2 in 2025 which would have given the 2026 payment a real lift, but not any more.

LOTM

[churchill2] 19/12/2023 10:49

It looks a reasonable deal to me. My estimate for the total repayment from Waldorf on the previous arrangement was $77 million. This must prove helpful to current management to plug some of the holes in this sinking ship.

[last of the mohicans] 19/12/2023 08:49

hmm that's an interesting move & gets both companies out of a hole, not sure if Waldorf or Capricorn got the better deal though!

We'll let you off the hook with that $48M of yours that's tied up for years to come & in return you pay it to us immediately & thus you don't need to make the big payment to us in a couple of month's time.

I think Waldorf has got off the better initially longer term harder to say. At least Capricorn has the cash to pay Shell in January now without having to borrow it from elsewhere.

But will shareholders get to see any of that $48M in 2024 ?

GLA
LOTM

[last of the mohicans] 15/12/2023 19:23

Wow what went on at the close today ?

All those trades going through straight after the auction (59 trades - for 88K).

A few got burnt fingers today trading up close to £1.50 & then down to £1.374 for the weak close.

GLA
LOTM

[last of the mohicans] 15/12/2023 05:25

There is a further update to the major shareholders list for 1st December.

I'm just not sure how accurate it is ......

Citigroup had a large holding of 5.29% on 28th November & its not on the list & there's been no notification to say its dropped.

Honestly Goldman Sachs seem to be the only one out there that seems to be on top of compliance issues & give holding updates as required.

GLA

LOTM

[last of the mohicans] 05/12/2023 15:35

Hi churchill2,

Yes he may regret saying that about the staff! (its a new board & they did seem motivated, not heard much from them of late!)

hmm I looked at the Waldorf payment last night, yes the 2022 payment was received in March 2023, but the previous year's one wasn't received until June!

And Waldorf are not in a good position financially !

So I'm not sure we will get it in Q1, they might prefer to pay the interest on the debt & take longer to pay it!

The oil price isn't helping with the amount Capricorn will get either !

And yes I'm still amazed that the share price is still above £1.30 ............................

LOTM

[churchill2] 05/12/2023 14:54

Hi LOTM
Just a couple of points.
I keep being drawn back to the initial comments made by Randy Neely re highly professional experienced staff and motivated board. It seems that his judgement of what has been going on for years is badly flawed.
My other concern is my lack of confidence in any meaningful increase in oil and gas resources attributable to Egypt especially after the technical write downs in the 2022 accounts re your point about a possible sale of the Company.
The remaining bright spot is we are nearly at the end of 2023 and the North Sea payment of approximately $50 million is due first quarter 2024.
For what it’s worth I do not believe the claim by Senegal has any legs which may be a relief as any payment due is time excluded.

[last of the mohicans] 05/12/2023 10:54

Hi xxnjr,

I'm not sure the "existing experienced E&P head count" were in fact those with the right skill sets, which is why the vast majority of them are being shown the door (or over paid under achievers in amongst them to)

hmm all your eggs in one basket is an issue for sure, although there is still the contingent payments that are from countries other than Egypt & that lasts 2 more years North Sea wise.

Problem is none of the other ones (licences outside Egypt) they had, had production ! all they did was stop the cash bleed. Given the poor results with the drill bit for a while now, I'd say it was the correct call.

If you think about it, the failure to make any progress with Egypt to date is down to the Egyptian Operation having the wrong staff (old directors & those high up in Egypt).

If you don't have the right staff to operate exploration licences properly, then what do you do ? go out & hire them or pass them over to a partner who is already operating multiple licences in Egypt including joint ventures Capricorn isn't involved in.

On the surface it makes total sense, but the announcement hints of problems!

Until we know more we're just guessing at what the issues might be !

But it does make the decision look stupid (even if there wasn't in reality much of a viable choice).

There is certainly the possibility of them just selling out at some point.

LOTM

[xxnjr] 05/12/2023 10:20

Hi LOTM
I'll 2nd that(165). Thank you for putting in the time and effort to analyse the sad state of affairs here. I've long since sold my holding but occasionally drop in to see how things are progressing. Not very well! ISTR recall previous management suggested their newly acquired Egyptian assets would soon reverse recent decline (from a historic 50K net to 35K net then?) with a glide path to get back to say 40-45 Kboepd net within 3 or 4 yrs. Yeah! That worked well! The new guys sacking 90%? of existing experienced E&P head count doesn't seem to have worked. Outsourcing operatorship hasn't worked. Current management seem to think they know more than the newly appointed operator does! Putting all your eggs into one basket hasn't worked due to the receivables issue with Egypt. Wouldn't surprise me if at some point CNE just sell up and the company no longer exists as a listed entity

[last of the mohicans] 05/12/2023 10:02

Hi churchill2,

From what I've gathered he was well thought of at Transglobe Energy.

Maybe he can get 2 or 3 key people he knew & trusted back then who have the required skill set to come & work for Capricorn Egypt.

I think he'll now be cleaning house in Egypt.

The One really big thing in his favour for now is the reduction to G&A going forward, it should be down close to that $20M a year run rate in just a few weeks time. So he's working with a massively reduced cost base.

That said it doesn't look like the cost base is the NEW problem in Egypt, it seems far more worrying than that.

The next thing I really would like to get a handle on is this ESOP/SIP trust situation. Last year they spend $20M on it ! yes I know they got a lot of it back, but that is now a massive sum of money.

What's scary about it is, that was for just 220 staff in other words close to $100,000 per employee !!!

What were all these highly paid employees (who are shareholders through the ESOP & meant to be aligned with investment shareholders) actually doing to create value for the company ?

Drilling targets seem to have been very poor etc

They were raking in high salaries that results wise simply weren't justified.

They seem to have been employing the wrong people, with the wrong skill sets !!!

So I'm kind of dreading to find out in March how this ESOP did given its meant to payout when staff leave.

Other new development of note is that some company is now shorting the stock following Friday's announcement!

Given there is so much stock already borrowed for voting rights, I guess someone is lending the stock to someone else, so getting 2 income streams !

LOTM

[churchill2] 03/12/2023 19:19

Hi LOTM
Thanks for your excellent analysis. It does make the half year presentation only a few months ago look half baked nonsense. Can this be turned around is the question. Has Randy Neely got the clout to make a vast improvement in the operational side. If not this Company is just going to slide into obscurity taking long suffering shareholders with it.

[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

------------------------

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.