FPSO hasn't been seen for 8 days now.
By going by the distance it moved from the 28th Jan to 31st Jan before moving out of range, it should be seen in the next 2 days off the coast of Sierra Leone. After that it should be about another 5 days until it gets to Senegal.
I'm not sure if the current political situation in Senegal is going to affect things regarding getting the field into production before the end of June.
--------------
Hopefully the buy-back program had a good day today, there was quite a lot of bot trades going through so hopefully they picked up 60,000+ at under £1.30
I'm watching things unfold but there is no temptation to start buying any shares yet, to many unanswered questions.
If it gets to under £1.15 I'll start to seriously consider it again.
GLA
LOTM |
 I was thinking about the pre-close update over the weekend & actually its quite scary when you put 2 & 2 together.
You go back to the half year report from 14th September (which is just over 4 months ago) & back then they were forecasting production for the year at the bottom end of there previous range of 32-36,000 boepd exiting 2023 at over 34,000. Now this new guidance was a mark down of expectations.
Yet in the pre-close announcement, production came in at just 30,222 boepd for 2023 (roughly 2,000 boepd below the forecast in just 3 months timewise).
Further more the "Teen and Badr El Din (BED) LLP projects are now complete and beginning to ramp up" ( they were part of the reason they were forecasting the 34,000 exit rate that we ended up over 10% below)
Now even with those projects factored (and not reached peak production yet) in Capricorn are indicating that production for 2024 is likely to decline by 20 - 30%.
That's 20-30% on 30,222 boepd not the original range they expected but missed considerably & its also after taking into account "flush" production from the recently added wells.
Pretty scary stuff when you think about the company's future & how quickly production might fall in 2025 also & how they turn things around on the development side.
As I said not getting that November Presentation really does mean Shareholders are in the dark & not in a good way.
They have a lot of explaining to do.
LOTM |
FPSO started moving again about 07:00 GMT today Sunday 28/01 & is heading towards Senegal.
LOTM |
After reflecting overnight on the update, the biggest thing that is missing is an actual update on what was achieved in Egypt in 2023.
The postponement of the Egypt presentation at the end of November is in reality a major blow to investors, because we have no idea of what was achieved for the roughly $93M of Capex spent in Egypt in 2023.
There has been no drilling updates or detailed reports giving the licence name, the well, what was found, if so the flow test results & if its on production yet or not & one of the most important parts new reserve numbers
Yes there has been some snippets given to us, but not a real in depth insight into it all. Without that investors have no real idea if the money has been well spent or not.
From what I've read, it doesn't look like we've found that much in the way of new reserves. The more wildcat drilling side of things seems to have just turned up dry holes even with 3D seismic.
The only successes seem to have been step out wells from existing producing wells.
The long & short of it is this, if we don't have a baseline telling us what we have then its impossible to tell if we're actually making progress or not. Or if we are simply sending good money after bad & would be better off just producing what we've got (other than in-fill locations) & taking the money & running rather than spending it on Capex where we're losing it & getting no real return on it.
LOTM |
Looking at the actual numbers, comparing the end of Dec with end of Oct.
Amount outstanding from Egypt $173M compared to $170M end Oct with $139M overdue at that point.
$190M in cash & loan debt of $114M compared to $158M with loan debt of $113M in Oct. So that's a gain of $32M in cash but when you take into account the Waldorf payment of $48M it means a spend of $16M in just 2 months ! plus another $1M loan increase. The buy-back would account for roughly $2M of that $17M spend.
Also Capex is meant to be around $120M which is in the bottom half of the $117M - $127M range from October (there wasn't a published Capex spend number to the end of October).
Not as rosy a picture as you might think.
LOTM |
Hmm not the best of updates from Capricorn.
They are clearly trying to delay so many things to buy themselves time for hopefully the government to finally start paying off the massive arrears.
They deliberately didn't say how much of the $173M is overdue.
Looks like there trying not to pay-off the debt as quickly as would otherwise be the case, or the next payment & interest didn't arise until 1st Jan 2024.
As for the FPSO well it hasn't moved in 5 days now !
So either there is a problem with the vessel or they were ahead of schedule & are just passing time, not Capricorn's cost but the tugs with it will be costing a pretty penny every day to hire. So I'd have thought they would have wanted to get the journey done ASAP.
GLA
LOTM |
Could be a problem with the FPSO.
I wondered why it was hugging the coast after passing Cape Town & not going with the normal traffic flow up towards Senegal, (which it would have reached in just 1 week if it had carried on)
Its at Walvis Bay Anch Namibia !
Maybe its sheltering from a storm or problems with one of the tugs or its engine etc but it would appear to be an unexpected stop on the journey.
Hopefully it gets moving again soon as each passing day is vital for qualifying for that $25M or 50M payment or not at all.
GLA
LOTM |
Now 200 miles or so SSW of Cape Town.
Looks like it will arrive in Senegal before the end of the month.
Just as well it past Mauritius & Reunion islands when it did otherwise it could have got caught up in that typhoon & that could have caused major problems.
GLA
LOTM |
Its now south of Reunion, with possibly 3 tugs with it!
So not sure if its under its own steam (so to speak or not).
Looking at the route I'd say just past Madagascar is half way distance wise, so I think 1st week of Feb for arrival is on the mark.
GLA
LOTM |
Hi churchill2,
It has an engine for sure, looks on the latest map view to be accompanied by 1 tug/special craft. Its also listed as having Restricted Manoeuvrability
It is due south of Mauritius right now as I write, Reunion is next island it will pass on Sunday. Speed has slowed a little so it will be Wednesday by the looks of it to get to Madagascar.
GLA
LOTM |
Would guess it is not being towed. It’s a converted VLCC so presumably it has an engine but what do I know. |
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
----------------------------
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 |
"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 |
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! |
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 |
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. |
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 |
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 |
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 |
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 |
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. |
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 |
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 |
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 |
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. |
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