THIS ANNOUNCEMENT CONTAINS
INSIDE INFORMATION
28 March 2024
CAPRICORN ENERGY PLC
("Capricorn" or "the Company")
Full Year Results
Announcement for the year ended 31 December 2023 and announcement
of proposed $50m special dividend
(Unless otherwise stated,
all dollar amounts ($) refer to US dollars)
Randy Neely, Chief Executive, Capricorn Energy PLC
said:
"In the last year, the renewed Board executed multiple
strategic initiatives to transform Capricorn: cost reduction
programmes, focusing the corporate opportunities portfolio on Egypt
and changes to the culture of the business, which we continue to
push through. Alongside this strategic refresh, the Board made
returning capital to shareholders a core business objective,
returning ~$568m in 2023. Additionally, I am delighted to announce
that we are proposing a $50m special dividend to be paid in Q2
2024, subject to shareholder approval.
Significant progress was made in 2023 in exiting our
non-Egypt exploration licences in Mexico, Mauritania and Suriname.
We settled our remaining earnout considerations due from Waldorf
Production Ltd (Waldorf) in exchange for a $72.5m payment and 25%
working interest (WI) in the Columbus gas field (subject to
completion), maintaining an ongoing presence in the UK North Sea.
There remains the potential of a contingent payment from Woodside
Energy's (Woodside) Sangomar Field Development in
Senegal.
We remain committed to the potential of our Egypt assets and
believe that Egypt is a strong jurisdiction for oil and gas
companies to do business. In 2023, the Company's receivables
balance increased materially, however, throughout my twelve years
working in Egypt, and looking further back, the Government of Egypt
has always honoured its financial obligations to international
investors. Our relationships with both our joint venture partner,
Cheiron, and the Egyptian General Petroleum Corporation (EGPC)
continue to build upon a strong foundation as we manage the
Egyptian portfolio through a cooperative and collaborative
approach. Additionally, the Company continues to engage with EGPC
regarding a potential amendment to the terms of our Production
Sharing Contracts (PSCs) - a key catalyst in unlocking value from
our Egypt assets.
Looking ahead, we are actively working with our partner to
maximise the potential of our Egyptian portfolio and progress
amendments to the PSCs that support increased investment and
strengthened returns. We are confident that the receivables
position will improve in the coming months, supported by the Q1
2024 announcements of the UAE investment deal on the Egyptian north
coast and the International Monetary Fund loan, as well as
financial support package pledges from the EU and World
Bank. We are also pleased to announce that Capricorn received
payment of $30m from EGPC this week, further demonstrating the
improving fiscal landscape. By focusing on production and
development opportunities to provide sustainable, best in class
returns, and deepening our relationships with our Partner and the
Egyptian Government, our renewed team will ensure that Capricorn
advances confidently and successfully in 2024 and
beyond."
Strategic Highlights
Ø Delivery on our shareholder return commitment set out in the
strategic review, with ~$568m paid to shareholders in 2023 and a
further planned dividend payment of $50m in Q2 2024, accompanied by
a share consolidation, subject to shareholder approval
Ø Ongoing
$25m share buyback programme - ~$21m repurchased to date, with
progress limited by reduced trading volumes
Ø Corporate focus on maximising value from the Egypt
portfolio
Ø Full
exit of non-core exploration positions in Mauritania, Mexico and
Suriname
Ø Appointment of Randy Neely as Chief Executive Officer and
Director
Ø Right
sized the organisation with 80% UK headcount reduction
Ø Revised
agreement with Waldorf relating to the Company's disposal of its
Catcher and Kraken interests, with Capricorn now to receive $72.5m
over the 12 months following the settlement date and Waldorf's 25%
WI in the Columbus gas field in the UK North Sea, subject to
completion. *
Operational Highlights
Ø WI
Egypt oil and gas production 30,044 boepd, comprising 47% liquids;
net entitlement sales volumes 12,161 boepd
Ø 23
additional wells were put on production adding ~6300 bopd and ~16
mmscfd
Ø Of the
29 development wells drilled, 25 targeted liquids production,
reflecting the execution of a liquids focused strategy
Ø In
total nine near field exploitation (NFE) wells were drilled, seven
of which were successful, adding developed producing reserves of ~1
mmboe
Ø Exploration drilling in the first half of 2023 was
unsuccessful with three wells drilled
Ø Operating costs per boe of $5.4 on a WI basis
Ø Making
progress with opportunistic investments to
decarbonise and reduce operating costs.
Financial Highlights
Ø Revenues of $201m with average oil price of $81.2/bbl and gas
price of $2.9/mmscf; production costs of $60m
Ø $49m
exploration capex and general exploration costs; $15m in Egypt and
$34m across legacy international portfolio
Ø $91m
capex on Egypt producing assets
Ø Net
cash inflow of $32m from Egypt operations
Ø Group
net cash of $76m; comprising $190m cash and $114m debt
Ø Receivables of $169m, after expected credit loss
adjustments
Ø Gross
G&A of $75m inclusive of restructuring costs
Ø $48m
contingent payment received in December related to the disposition
of the Company's legacy UK North Sea assets with a further $24.5m
to be received over the next 10 months
Ø Group
cash expenditure on oil and gas assets $88m; $43m exploration,
including general costs, and $44m producing assets
Ø Operating loss of $87m from continuing operations
Ø Combined impairment charge of $44m on Egypt producing assets
and related goodwill
Ø Loss
after tax of $144m.
2024 Outlook
Ø Post-year end appointment of Eddie Ok as CFO and Geoff
Probert as COO
Ø The
Company remains committed to aligning investment in Egypt with
funds available in country - an update on 2024 guidance and budget
is expected to be provided once the Company has clarity on
accessible funds generated in country
Ø Production in 2024 is guided in the range of 20-24,000 boepd,
48% of which is forecast to be liquids
Ø Operating costs forecast to be stable at $7-$9/boe influenced
by liquids processing volume and absolute production
levels
Ø The
Company continues to focus on costs with gross G&A expected to
reach a year end run rate of <$20m per year, net of remaining
restructuring costs
Ø On the
Alam El Shawish (AESW) concession (20% working interest), Capricorn
was voted into a 2024 work programme by the joint venture, with a
corresponding net capital exposure of $4.3m
Ø The
Company is currently committed to spend a further net ~$10m in 2024
comprised of up to five non-operated exploration wells, including
activity to de-risk the Abu Roash F unconventional play. Capricorn
intends to seek at least a partial deferment of these expenditures
into 2025
Ø The
Company is working with the Operator in Egypt to amend the EGPC
concession terms and secure extensions to support increased
investment and strengthened returns
Ø Capricorn expects to complete the acquisition of a 25% WI in
the Columbus gas condensate field in Q2 2024*
Ø The
Company is currently seeking to defer amounts due under its
remaining contingent obligations related to the acquisition of its
Egyptian assets.
*In the event that the acquisition
does not complete by the longstop date, Capricorn will receive a
payment of $7m.
The information contained within
this announcement is deemed by the Company to constitute inside
information as stipulated under the Market Abuse Regulation
("MAR"). Upon the
publication of this announcement via Regulatory Information Service
("RIS"), this inside
information is now considered to be in the public domain.
The person responsible for arranging the release
of this announcement on behalf of Capricorn is Paul Ervine, Company
Secretary.
Enquiries to:
Analysts / Investors
Nathan Piper, Commercial
Director
Tel: 0131 475
3000
Media
Diana Milford, Corporate
Affairs
Tel: 0131 475 3000
Billy Clegg/Owen Roberts,
Camarco Tel: 020 3757 4980
Presentation
The results presentation slides
will be available on the website from 09:00 UK time.
Analyst conference call
You can listen to the results
presentation by dialling in to a conference call at 11:45 UK time
using the below dial-in-details. Analysts who wish to ask a
question should use the conference call facility.
Dial-in Details:
United Kingdom (Local): +44 (0)330
551 0200
Access code: Quote
'Capricorn-Full Year' when prompted by operator
Webcast
There will be a live audio webcast
of the results presentation available to view on the website
(www.capricornenergy.com)
at 12:00 UK time. This can be accessed on PC,
Mac, iPad, iPhone, and Android mobile devices.
An 'on demand' version of the
webcast will be available on the website as soon as possible after
the event. This can be viewed on PC, Mac, iPad, iPhone, and Android
mobile devices.
The
LEI of Capricorn is 213800ZJEUQ8ZOC9AL24
Corporate overview
Following the renewal of the Board
in Q1 2023, led by Chair Craig van der Laan, Capricorn immediately
began a strategic review which resulted in five key priorities that
governed activity for the year: capital returns, cost savings scale
back of non-core operations, maximisation of value from Egypt and a
comprehensive company culture change.
During the period, ~$568m in
capital was successfully returned to shareholders; the majority of
Capricorn's positions outside Egypt were exited; and a culture
change focused on shareholder value and capital discipline is
progressing through the organisation.
Egypt remains an attractive sector
for oil and gas companies to operate, with a government that is
open to constructive relationships with the industry. Capricorn is
committed to building out the business by developing accretive
opportunities within its portfolio to create a compelling value
proposition to investors, establishing ourselves as a
returns-focused, agile energy company targeting consistent capital
returns.
To drive further change within the
Company, Randy Neely was brought in as CEO, bringing with him
extensive experience of running a low-cost, effective business in
Egypt and creating value in country. Post-period, the Company has
welcomed Eddie Ok as CFO and Geoff Probert as COO.
Reserves
Capricorn engaged GLJ Ltd. (GLJ)
to undertake an independent oil and gas reserves evaluation on the
Company's Egypt assets, to document the 2023 year end reserves
position. GLJ undertook a full review of the producing assets and
the inventory of new well opportunities to assess total proved
developed producing (PDP), total proved (1P), total proved plus
probable (2P), and total proved plus probable plus possible (3P)
reserves. The reserves were prepared in accordance with the latest
SPE Petroleum Resources Management System (PRMS) approved
definitions of Reserves and Resources. GLJ based their
evaluation on information and data provided by Capricorn. The
highlights of the reserves report are summarised below:
· Relative to year end 2022, net entitlement interest 2P
reserves after 2023 production reduced by 13% to 19.4
mmboe
· Developed producing reserves additions in 2023 replaced 60%
of production with 47% of this addition occurring in the Badr El
Din (BED) area
· 35%
of the 2P reserves are categorised as undeveloped, reflecting a
decrease from year end 2022 due to the impact of activity deferment
with reduced rig activity in 2024 and an updated view of the new
well inventory with a reduction in locations
· The
net present value of future net entitlement revenues, discounted at
15% (NPV15) for the 2P basis is $267m.
|
2P Oil & Condensate
reserves (mmbo)
|
2P Natural Gas (bcf)
Reserves
|
Total 2P Reserves Boe
(mmboe)
|
|
Net
WI
|
Net
Entitlement
|
Net
WI
|
Net
Entitlement
|
Net
WI
|
Net
Entitlement
|
|
20.4
|
7.8
|
167.8
|
65.0
|
50.4
|
19.4
|
Egypt Production
WI production in 2023 across the
four main concession areas of Obaiyed (Capricorn 50% WI), BED
(Capricorn 50% WI), North East Abu Gharadig (Capricorn 26% WI) and
AESW (Capricorn 20% WI) averaged 30,044 boepd (47% oil) for the
year. As previously disclosed, this was below the low end of the
original 2023 guidance of 32-36,000 boepd, as a consequence of the
delay in the delivery of key projects at Teen and in the BED area,
along with lower than expected contributions from some new wells
and four fewer wells than originally forecast in 2023.
Drilling activity at the end of
2023 continued to be focused on the Abu Roash reservoir targets in
the BED concession, where a campaign of step-out and delineation
wells saw positive results. These fields have been the focus of
field development studies undertaken by Capricorn to optimise
further development activity and waterflood strategy. The complex
distribution of the Abu Roash reservoir sands and their dynamic
behaviour is now better understood and consequently these important
fields in the BED concession will remain the focus of development
activity following the resumption of drilling.
A number of facilities projects
were completed towards the end of 2023 at BED, Teen and Karam.
These projects focused on optimising gas production with
compression and low-pressure production optimisation, with
production impact continuing to be assessed in Q1 2024. There are
no further major projects planned in 2024.
Egypt Exploration
Capricorn is in the process of
transferring operatorship, however retains participation in three
exploration concessions in the Western Desert. The Company
continues to work with our partner to negotiate with EGPC for an
extension to the concession timelines, allowing a partial deferment
of some of this exploration activity into at least 2025.
Notwithstanding seeking a partial
deferment, once the Company has clarity on the availability of
funds from Egypt operations, exploration activity is expected to
include: i) up to three wells in the West El Fayium concession to
meet the original minimum work obligation, including a component to
de-risk and develop our understanding of the emerging
unconventional Abu Roash F formation; ii) a well in the South East
Horus concession and fulfilment of the minimum work obligation; and
iii) drilling activity commencing towards the end of 2024 in the
North Um Baraka concession, where there is a remaining two well
commitment.
UK Production
In December 2023, Capricorn agreed
to acquire Waldorf's 25% non-operated WI in the Columbus gas field
located in the UK Central North Sea in Q1 2024. The interest will
be transferred into an existing Capricorn UK subsidiary and should
deliver consistent cash flows from a 1 January 2024 effective date,
with approximately 80% of production exposed to the UK gas price.
In addition, the acquisition of the Columbus field allows the
Company to maintain its presence in the UK North Sea where it has
been active over the last decade through continuous exploration and
production activities. Columbus is expected to provide ~400 boepd
from completion of the deal, expected to conclude in Q2
2024.
Non-core Portfolio
Mexico
Capricorn has interests in two
blocks in the Gulf of Mexico, as non-Operator in Block 7 (Capricorn
30% WI) and Block 10 (Capricorn 15% WI). The Company has issued
notices of withdrawal on these licences and expects to have
formally withdrawn by the end of Q2 2024.
Senegal
On 13 February 2024, Capricorn
noted Woodside's announcement confirming the arrival of the FPSO
facility for Woodside's Sangomar Field development offshore Senegal
and its intention to continue to target First Production for
mid-2024. As defined in the sale and purchase agreement, Capricorn
may become entitled to a contingent payment of either $25m or $50m
if the average Brent oil price during the first six months of
production exceeds the $55 per barrel or $60 per barrel thresholds
and first oil is achieved in the first half of 2024. If first oil
is achieved prior to 30 June 2024, the contingent payment would be
due in early 2025 once the average oil price has been determined
and there has been 30 days of continuous production. First oil is
defined as the first continuous 72-hour period of production from
the Sangomar Field during which at least a total of 30,000 barrels
is produced for sale.
In either case, no additional
payment will be due from Woodside if the average Brent price is
less than or equal to $55 per barrel or if first oil is achieved
later than H1 2024.
As previously noted, a tax audit
is taking place with respect to Capricorn's disposal of its
interests in the Sangomar Field offshore Senegal. The tax process
is ongoing with respect to real estate capital gains tax (~$10m
plus interest and penalties) and registration duties (~$25m plus
interest and penalties). The Company's position remains that
no tax is payable. A payment demand for the full amount (~$45m) was
received by Woodside in March 2024 from the Senegalese tax
authorities.
Capricorn remains committed to
returning any proceeds of any contingent payment to its
shareholders.
Outlook
Capricorn is working with its
Partner in Egypt to ensure the appropriate scale of rig fleet is
deployed to enable effective exploitation of the asset base, in
alignment with our strategic review commitments. Drilling activity
in Egypt is expected to be lower in 2024 in the absence of a plan
to reduce the Company's Egyptian receivables. This will support the
delivery of the most efficient drilling campaign to optimise
reservoir management and better align capital activity to
accessible funds generated in country. While timing uncertainty
around collections continues, the Company is managing its Egyptian
business obligations and expects to collect the amount outstanding
in full.
In the absence of development
drilling in our 50% WI concessions, average production is expected
to decline by 20-30% over the year to a range of 20-24,000 boepd.
Once there is clarity around an EGPC payment plan, Capricorn will
be able to provide an approved budget to define its 2024 capex,
opex and production guidance.
The Company is currently committed
to an exploration capex spend of ~ $10m in 2024 comprising up to
five non-operated exploration wells, including activity to de-risk
the potentially extensive Abu Roash F unconventional play. At
this time the Company is working with the Operator to seek at least
a partial deferment of these expenditures into 2025 from
EGPC.
Capricorn is currently seeking a
commercial resolution to contingent amounts due under its remaining
obligations to the seller on the acquisition of its Egyptian
assets.
The Company expects to complete
the acquisition of 25% WI in the Columbus gas condensate field in
Q2 2024.
Principal risks and uncertainties
Managing Capricorn's key risks and
associated opportunities are essential to the Company's long-term
success and sustainability. Capricorn's risk management framework
provides a systematic process for the identification and management
of the key risks and opportunities which may affect the delivery of
the Group's strategic objectives. Key performance indicators (KPIs)
are set annually and determining the level of risk the business is
willing to accept in the pursuit of these objectives is a
fundamental component of Capricorn's risk management
framework.
Overall responsibility for the
system of risk management and internal control and reviewing the
effectiveness of such systems rests with the Board. Principal risks
are presented at each Board meeting and at least once a year the
Board undertakes a risk workshop to review the Group's principal
and emerging risks. This integrated approach to risk management has
been and continues to be critical to the delivery of strategic
objectives.
Responding to changing risks
during 2023
Capricorn has assessed the
principal risks and uncertainties at the end of 2023. The principal
risks are:
· Increasing EGPC receivables balance
· Volatile oil and gas prices
· Failure to replace long-term reserves and
resources
· Underperformance on Egypt assets
· Political and fiscal uncertainties
· Lack
of adherence to health, safety, environment and security
policies
· Future challenges and costs as markets transition to Net
Zero
·
Breach of Group Code of Ethics
Within the Group's risk assessment
framework, emerging risks are considered as part of the
identification phase. These are risks that cannot yet be fully
assessed, risks that are known but are not likely to have an impact
for several years, or risks which are unknown but could have
implications for the business moving forward.
Egypt continues to be the focus of
the discussions and work continues to identify potential known and
emerging threats and opportunities which could impact on
Capricorn's ability to grow the Egypt business both organically and
inorganically.
Financial Review
Key production statistics
|
|
|
Year
ended
31
December
2023
|
Year
ended
31
December 2022
|
|
Production - net WI share
(boepd)
|
|
30,044
|
34,228
|
|
Sales volumes - net EI oil
(boepd)
|
|
5,367
|
5,028
|
|
Sales volume - net EI gas
(mscfd)
|
|
38,049
|
44,468
|
|
Average price per bbl
($)
|
|
81.2
|
98.8
|
|
Revenue from production
($m)
|
|
199.9
|
228.9
|
|
Average production costs per boe
($)
|
|
5.4
|
5.7
|
Loss for the Period
|
|
|
Year
ended
31
December
2023
$m
|
Year
ended
31
December
2022
(restated)
$m
|
|
|
|
|
|
|
Loss from Egypt business operating
segment
|
|
(60.4)
|
(41.2)
|
|
Loss from other Group continuing
operations
|
|
(82.2)
|
(135.2)
|
|
Loss/(Profit) from discontinued
operations
|
|
(1.4)
|
109.3
|
|
|
|
|
|
|
Loss after taxation
|
|
(144.0)
|
(67.1)
|
Change in Accounting Policy - Intangible
exploration/appraisal assets
Following completion of the Group's
strategic review in 2023, Capricorn has changed its policy for
accounting for non-well specific general exploration costs.
Previously such costs were capitalised and allocated to future
exploration wells and would either remain capitalised or be charged
to the Income Statement dependent upon the success of the
well. Now, all non-well specific exploration costs are
charged to the Income Statements as they are incurred.
The directors believe that this
policy provides a clearer understanding of the performance of the
Group in any given period as Capricorn moves from an
exploration-led business to one focused on maximising value from
its producing assets.
Egypt Business Operating Segment Results
In Egypt, total revenue was
$199.9m. $159.1m was generated on sale of liquids with an
average price of $81.2 per bbl on net entitlement volumes of
1,959,000 bbls. Gas revenue was $40.8m from volumes of
13,887,800 mscf at the contracted rate of $2.9 per mscf.
Cost of sales in the year were
$59.6m, including inventory movements. Production costs
decreased slightly to $5.4 per boe, on a working interest
production over the year, while depletion charges were $120.4m, at
a weighted average rate of $22.8 per boe across the
concessions. Expected credit loss adjustments for the year
were $9.0m, reflecting the increased ageing of trade receivables in
Egypt.
Capricorn records other income on
additional production that is notionally allocated to the Group to
cover tax due on profits from the concessions. This is offset
by an equal and opposite tax charge. In the current period,
the value of this income and notional tax gross-up is
$54.1m.
At the year end, the Egypt assets
were tested for impairment, with impairment recorded on producing
assets of $29.1m and goodwill of $14.6m. Related deferred tax
credits were $6.6m. Further details are provided
below.
A fair value loss of $8.0m on the
mark-to-market valuation of deferred consideration due relating to
the 2021 business combination was recorded in the year.
Capricorn, with our partner Cheiron, are in discussions with the
seller regarding settlement of the $25.0m due in 2024 and one
further payment of up to $25.0m is due in 2025.
Net finance costs in Egypt of
$17.3m, includes loan interest and charges and the total tax charge
on Egypt operations for the year is $40.5m, being the tax gross-up
charge of $54.1m offset by deferred tax credits on asset temporary
differences.
Results from Other Continuing operations
The loss on other continuing
operations of $81.8m includes unsuccessful exploration costs of
$17.9m and general exploration costs of $16.2m. $26.3m of
this cost related to operations in Mexico where the Group concluded
its exploration programme, in early 2023, with the drilling of the
Yatzil well. General exploration costs also include costs in
Mauritania, Suriname and the UK as the Group moved away from its
previous focus on international exploration.
Net finance income of $13.8m
includes interest earned on cash and cash equivalents of $19.9m
offset by finance charges and foreign exchange losses of
$6.1m.
Capricorn recorded a $4.0m
impairment on assets held-for-sale relating to an investment held
in India.
Discontinued Operations
Settlement of earnout consideration due on disposal of UK
Producing assets
Following the settlement agreement
with Waldorf, Capricorn received an immediate payment of $48.0m
with a further $2.0m due in April 2024, matching the ~$50m that was
due for 2023 production. Capricorn will further receive
$22.5m in January 2025 and Waldorf's 25% WI in the Columbus gas
field in the UK North Sea (subject to completion). Adding the
fair value of Columbus brings total consideration to $79.5m before
expected credit loss adjustments. The transaction recorded a
loss of $1.7m compared to the fair value of the remaining earnout
at the date of the transaction but brings certainty to the further
receivables due, as well as continuing the Group's operating
activities in the UK.
Prior to the settlement of the
earnout, Capricorn recorded a year-to-date fair value loss of
$10.4m on mark-to-market valuations of the remaining consideration
due, bringing total losses in the year to $12.1m. This was
offset by interest income of $2.3m on the 2022 earnout payment
received in March 2023, a refund of past production costs of $4.3m
from joint venture audit settlements and a deferred tax credit of
$4.1m, with consideration from the settlement of the earnout now
expected to be sheltered in full by available tax losses.
This resulted in a net loss from discontinued operations of $1.4m
over the year.
Across all segments, gross
administration charges were $74.9m, including $16.5m of redundancy
costs following the reduction in Group headcount, $6.7m of
depreciation and amortisation expenses, with a further $6.9m of
costs relating to the aborted transaction costs. Net
administration costs reduce to $61.9m after recharges and
recoveries.
Contingent consideration on Senegal asset
sale
Capricorn disposed of its
interests in Senegal in 2020. Under the sale agreement,
Capricorn is due further consideration of up to $50m based on the
first oil date falling before 30 June 2024 and the prevailing oil
price. No revenue or asset has been recognised for this
possible income.
Senegal tax assessment
As previously noted, a payment
demand for Senegal taxes and duties was received by Woodside in
March 2024, including ~$45m with respect to the Group's disposal of
its interests in 2021. Capricorn believes that neither claim is
valid and is working with Woodside to defend the Group's
position. No provision has been made in the financial
statements at the year end.
Net cash inflow for the Year
|
|
$m
|
|
Opening net cash as at 1 January
2023
|
596.9
|
|
Shareholder returns - Dividends
and share re-purchase
|
(561.0)
|
|
Net cash inflow from UK North Sea
settlements
|
189.0
|
|
Net cash inflow from Egypt
operations
|
32.3
|
|
Exploration expenditure -
Egypt
|
(12.2)
|
|
Exploration expenditure - other
legacy assets
|
(31.1)
|
|
Development expenditure -
Egypt
|
(44.2)
|
|
Deferred consideration -
Egypt
|
(25.0)
|
|
Pre-award costs and business
development 1
|
(6.1)
|
|
Administration expenses, corporate
assets, and office lease costs
|
(47.9)
|
|
Net finance costs, equity and
other movements
|
(14.8)
|
|
Closing net cash as at 31 December 2023
|
75.9
|
1 Cash outflows on business development of $5.1m not relating
to pre-award activities are reallocated from administration
costs
Cash and cash equivalent balances
at 31 December 2023 of $189.5m were offset by borrowings in Egypt
of $113.6m. Cash held inside of Egypt was $6.0m, while the
net debt of the Egypt business was $105.8m, including a prepaid
facility fee of $1.8m. Capricorn has committed not to inject
further cash into the Egypt business, other than to meet committed
exploration spend and deferred consideration payments, both covered
by parent company guarantees. Loan facilities are
non-recourse to the Group's non-Egypt assets.
At the date of approval of the
financial statements, Capricorn, together with Cheiron, is seeking
waivers from lenders for several potential events of default under
the facilities, all related to a lack of a payment plan from EGPC
to resolve the receivables position.
Restricted cash balances of $5.0m
and $5.6m exist in the UK and Egypt respectively. Egypt restricted
cash may be used to fund non-operated concessions in
Egypt.
Loan repayments in the year were
$48.3m. The facilities are subject to biannual redetermination
processes, with the September 2023 redetermination resulting in an
additional payment of $2.9m made early 2024.
Cash inflows from operations in
Egypt of $32.3m can be reconciled to cash flows from operations per
the statutory cash flow as follows:
|
|
$m
|
|
Operating cash flow per statutory cash flow
statement
|
(39.9)
|
|
|
|
|
Non-GAAP Adjustments:
|
|
|
Discontinued operations - working
capital settlements
|
(4.3)
|
|
Pre-award and new venture costs
reallocated
|
6.1
|
|
General exploration
costs
|
26.9
|
|
Administration expenses
|
45.9
|
|
Other adjustments
|
(2.4)
|
|
|
|
|
Net cash outflow from operations
|
32.3
|
Balance Sheet
The Group's net asset position at
31 December 2023 is summarised as follows:
|
|
$m
|
|
|
|
|
Exploration assets -
Egypt
|
2.5
|
|
Development assets -
Egypt
|
217.6
|
|
Other long-term assets (excluding
deferred tax assets)
|
52.9
|
|
Working capital -
non-Egypt
|
177.2
|
|
Cash and cash
equivalents
|
183.5
|
|
Trade and other receivables and
payables, and provisions
|
(6.3)
|
|
|
|
|
Working capital - Egypt
|
7.3
|
|
Trade and other receivables and
payables, and inventory
|
113.1
|
|
Net debt, including unamortised
facility fees
|
(105.8)
|
|
|
|
|
Asset held-for-sale
|
3.2
|
|
Lease liabilities
|
(7.4)
|
|
Deferred consideration on business
combination
|
(44.8)
|
|
Net deferred tax
liabilities
|
(2.0)
|
|
|
|
|
Net assets
|
406.5
|
Exploration assets
Following the change in accounting
policy, exploration assets of $2.5m at 31 December 2023 relate
wholly to planned exploration wells in Egypt.
Development assets and goodwill
Capricorn has not approved any
further drilling activity in Egypt and will not do so until a
payment plan has been agreed with EGPC. There are currently no
active rigs drilling on the Company's jointly held concessions,
down from a maximum of six during 2023.
This cessation of drilling
operations has led to a downgrade of booked 2P reserves at the year
end, which is in turn an indicator that the Group's assets may be
subject to impairment. Subsequent impairment tests performed
indicated a net impairment of $22.5m across two concession areas in
Egypt, and after adjusting for deferred tax credits, resulted in a
headline impairment charge of $29.1m against producing assets.
Impairment tests conducted on goodwill allocated to the Egypt
business unit resulted in a further impairment charge of
$14.6m.
The impairment tests performed
compare the carrying value of the Group's assets against their
recoverable value based on net present value model based on future
production profiles. Capricorn's base-case assumes that a
payment plan will be agreed and operations will commence with a
three-rig campaign mid-year 2024, with an increase in collections
commencing January 2025. Other key assumptions include a payment
plan that settles revenue six months from production, a long-term
oil price of $65 flat, a discount rate of 15% and a voluntary cost
of carbon based on the appropriate IEA scenario. Any degradation in
these assumptions could lead to further impairment charges, and
sensitivity analysis is included in note 2.8 to the financial
statements, showing the impact of changes to these
assumptions.
Post impairment, the carrying
value of the Group's development/producing assets in Egypt is
$217.6m and with remaining goodwill of $10.8m.
Other long-term assets
Non-oil and gas property, plant
and equipment and intangible assets at the year end totalled $14.5m
include $6.8m relating to unamortised carbon credits and $6.8m of
right-of-use assets, During the year the Company took possession of
two floors office space in Edinburgh previously proposed for new
head office space. Following the strategic review, this move
was cancelled, and the lease for one floor was cancelled in 2023
with the other sublet in early 2024.
Other long-term receivables
include the $22.5m due from Waldorf in 2025, adjusted for expected
credit losses as required under IFRS.
Working capital
Working capital outside of Egypt
includes residual balances from the Group's previous international
exploration activities together with funding of corporate
activities
Egypt trade receivables at the
year end were $168.7m, an increase of $71.9m across the
period. $143.1m of this amount was overdue. Capricorn
continues to engage with EGPC and Ministry of Petroleum &
Mineral Resources in Egypt to address the receivables
position.
Net working capital liabilities
across the Egypt concessions were $66.3m. This includes
additional creditors and accruals of $26.8m which were adjusted by
way of a prior year restatement in the Group balance sheet.
In 2022, Capricorn processed an opening cost adjustment of $29.2m
reducing joint venture credits and development/producing assets
relating to accruals that could not be supported by the Joint
Venture billings statements received from the operator. After
further investigation following access to the Bapetco source
accounting records, Capricorn concluded that these balances should
have remained on the balance sheet and had been reversed in error
in the prior year. This prior year restatement also leads to a
change in the 2022 depletion charge.
Equity movements
Shareholder returns and share premium
cancellation
Across 2023 Capricorn returned
$560m to shareholders by way of dividends of $541.1m and $18.9m
share re-purchase. Ahead of the two dividends, the Group converted
$450m and $100m respectively into £, fixing the returns in pence
per share. Exchange rate movements from the date of
conversion to the date of settlement resulted in the total $
equivalent of dividend payments of $541m recorded in the financial
statements. The Company undertook two share consolidations at
the same time as paying the dividends. A share premium cancellation
in advance of the returns completed in January 2023.
Capricorn Energy
PLC
Group Income
Statement
For the year ended 31 December
2023
|
|
|
2023
|
2022
(restated)
|
|
|
Note
|
$m
|
$m
|
|
Continuing operations
|
|
|
|
|
Revenue
|
2.1
|
201.0
|
229.6
|
|
Other income
|
2.1
|
54.1
|
54.8
|
|
Cost of sales
|
2.1
|
(59.6)
|
(71.2)
|
|
Depletion charge
|
2.3
|
(120.4)
|
(131.3)
|
|
Gross profit
|
|
75.1
|
81.9
|
|
General exploration
costs
|
|
(26.9)
|
(48.7)
|
|
Unsuccessful exploration well costs
|
2.2
|
(20.5)
|
(57.8)
|
|
Impairment of property, plant & equipment - development/producing assets
|
2.3
|
(29.1)
|
(42.6)
|
|
Impairment of goodwill
|
2.4
|
(14.6)
|
-
|
|
Expected credit loss adjustment on
revenue receivable
|
|
(9.0)
|
-
|
|
Pre-award costs
|
|
(1.1)
|
(9.2)
|
|
Other operating income
|
|
0.6
|
5.8
|
|
Administrative and other expenses
|
4.2
|
(61.9)
|
(65.0)
|
|
Operating loss
|
|
(87.4)
|
(135.6)
|
|
Fair value loss - deferred consideration on business combinations
|
3.4
|
(8.0)
|
(12.7)
|
|
Gain on financial assets at fair value through profit or loss
|
|
0.8
|
2.3
|
|
Impairment of an asset
held-for-sale
|
|
(4.0)
|
-
|
|
Finance income
|
4.3
|
21.8
|
15.7
|
|
Finance costs
|
4.4
|
(25.3)
|
(18.2)
|
|
Loss before
tax
from continuing operations
|
|
(102.1)
|
(148.5)
|
|
Taxation
|
|
|
|
|
Tax charge
|
5.1
|
(40.5)
|
(27.9)
|
|
Loss from
continuing operations
|
|
(142.6)
|
(176.4)
|
|
(Loss)/Profit from discontinued
operations
|
6.1
|
(1.4)
|
109.3
|
|
Loss for
the year
attributable to
equity holders
of
the Parent
|
|
(144.0)
|
(67.1)
|
|
Loss per
share for
loss from
continuing operations:
|
|
|
|
|
Loss per ordinary share - basic and diluted ($)
|
4.5
|
(0.74)
|
(0.49)
|
|
Loss per
share for
loss attributable
to
equity holders
of
the Parent:
|
|
|
|
|
Loss per ordinary share - basic diluted ($)
|
4.5
|
(0.75)
|
(0.19)
|
Group Statement of Comprehensive
Income
For the year ended 31 December
2023
|
|
|
2023
|
2022
(restated)
|
|
|
|
$m
|
$m
|
|
Loss for
the year
attributable to
equity holders
of
the Parent
|
|
(144.0)
|
(67.1)
|
|
Other Comprehensive
Income/(Expense)
-
items that
may be
recycled to
the Income
Statement
|
|
|
|
|
Currency translation
differences
|
|
5.1
|
(16.7)
|
|
Other Comprehensive
Income/(Expense) for the year
|
|
5.1
|
(16.7)
|
|
Total Comprehensive
Income/(Expense)
for the
year attributable
to
equity holders
of
|
|
|
|
|
the Parent
|
|
(138.9)
|
(83.8)
|
|
Total Comprehensive
Expense)/Income from:
|
|
|
|
|
Continuing operations
|
|
(137.5)
|
(193.1)
|
|
Discontinued operations
|
|
(1.4)
|
109.3
|
|
|
|
(138.9)
|
(83.8)
|
Capricorn Energy
PLC
Group Balance Sheet
As at 31 December 2023
|
|
Note
|
2023
$m
|
2022
(restated)
$m
|
|
Non-current assets
Intangible
exploration/appraisal assets
|
2.2
|
2.5
|
1.0
|
|
Property, plant & equipment - development/producing assets
|
2.3
|
217.6
|
275.8
|
|
Goodwill
|
2.4
|
10.8
|
25.4
|
|
Other property, plant & equipment and intangible assets
|
|
14.5
|
14.1
|
|
Other long-term
receivables
|
|
27.6
|
-
|
|
Financial assets at fair value through profit or loss
|
3.4
|
-
|
96.2
|
|
Deferred tax asset
|
5.2
|
7.6
|
8.7
|
|
|
|
280.6
|
421.2
|
|
Current assets
Cash and cash equivalents
|
3.1
|
189.5
|
756.8
|
|
Inventory
|
|
8.3
|
8.1
|
|
Trade and other receivables
|
3.3
|
186.0
|
142.5
|
|
Financial assets at fair value through profit or loss
|
3.4
|
-
|
134.4
|
|
|
|
383.8
|
1,041.8
|
|
Asset held-for-sale
|
|
3.2
|
-
|
|
Total assets
|
|
667.6
|
1,463.0
|
|
Current liabilities
Loans and borrowings
|
3.2
|
15.4
|
25.4
|
|
Lease liabilities
|
|
1.0
|
1.9
|
|
Deferred consideration on business combinations
|
3.4
|
25.0
|
25.0
|
|
Trade and other payables
|
3.5
|
82.0
|
84.9
|
|
|
|
123.4
|
137.2
|
|
Non-current liabilities
Loans and borrowings
|
3.2
|
96.4
|
133.2
|
|
Lease liabilities
|
|
6.4
|
2.4
|
|
Provisions - well abandonment
|
|
5.5
|
3.4
|
|
Deferred consideration on business combinations
|
3.4
|
19.8
|
36.8
|
|
Deferred tax liabilities
|
5.2
|
9.6
|
28.4
|
|
|
|
137.7
|
204.2
|
|
Total liabilities
|
|
261.1
|
341.4
|
|
Net assets
|
|
406.5
|
1,121.6
|
|
Equity attributable to
equity holders of the Parent
Called-up share capital
|
|
7.6
|
8.0
|
|
Share premium
|
|
0.8
|
495.4
|
|
Shares held by ESOP/SIP Trusts
|
|
(6.3)
|
(15.3)
|
|
Foreign currency translation
|
|
(85.7)
|
(90.8)
|
|
Merger and capital reserves
|
|
45.9
|
45.5
|
|
Retained earnings
|
|
444.2
|
678.8
|
|
Total equity
|
|
406.5
|
1,121.6
|
Capricorn Energy
PLC
Group Statement of Cash
Flows
For the year ended 31 December
2023
|
|
Note
|
2023
$m
|
2022
(restated)
$m
|
|
Cash flows
from operating
activities:
Loss before tax from continuing operations
|
|
(102.1)
|
(148.5)
|
|
(Loss)/Profit before tax from discontinued
operations
|
6.1
|
(5.5)
|
113.4
|
|
Loss before
tax including
discontinued operations
|
|
(107.6)
|
(35.1)
|
|
Adjustments for non-cash income and
expense
and non-operating cash flows:
Other income - tax entitlement volumes
|
|
(54.1)
|
(54.8)
|
|
Unsuccessful exploration well costs
|
|
20.5
|
57.8
|
|
Depreciation, depletion and amortisation
|
|
127.1
|
137.1
|
|
Impairment of goodwill
|
|
14.6
|
-
|
|
Impairment of property, plant & equipment - development/producing assets
|
|
29.1
|
42.6
|
|
Expected credit loss adjustment on
revenue receivable
|
|
9.0
|
-
|
|
Share-based payments charge
|
|
2.5
|
10.5
|
|
Fair value loss - deferred consideration on business combinations
|
|
8.0
|
12.7
|
|
Gain on financial assets at fair value through profit or loss - continuing
operations
|
|
(0.8)
|
|
|
Loss/(Gain) on financial assets at fair value through profit or loss - discontinued
operations
|
|
10.4
|
(112.7)
|
|
Impairment of an asset
held-for-sale
|
|
4.0
|
-
|
|
Loss on disposal of a financial
asset - discontinued operations
|
|
1.7
|
-
|
|
Finance income
|
|
(21.8)
|
(15.7)
|
|
Finance costs
|
|
25.3
|
18.2
|
|
Adjustments to
operating cash
flows for
movements in
current assets
and liabilities:
Inventory movement
|
|
(0.2)
|
2.7
|
|
Trade and other receivables movement
|
3.3
|
(69.0)
|
(38.7)
|
|
Trade and other payables movement
|
3.5
|
(38.6)
|
(9.8)
|
|
Net cash
flows (used
in)/from operating
activities
|
|
(39.9)
|
14.8
|
|
Cash flows
from investing
activities:
Exceptional income - India tax refund
|
|
-
|
1,056.0
|
|
Expenditure on intangible exploration/appraisal assets
|
|
(16.4)
|
(46.2)
|
|
Expenditure on property, plant & equipment - development/producing assets
|
|
(44.2)
|
(62.2)
|
|
Expenditure on other property, plant & equipment and intangible assets
|
|
(0.3)
|
(11.7)
|
|
Deferred consideration received
- discontinued
operations
|
|
182.4
|
75.7
|
|
Consideration paid for assets acquired through business combination
|
|
-
|
(3.2)
|
|
Deferred consideration paid
on business
combination
|
|
(25.0)
|
(20.9)
|
|
Proceeds on disposal of financial assets
|
|
-
|
12.8
|
|
Tax paid on investing activities
|
|
-
|
(0.2)
|
|
Interest received and other finance income
|
|
24.3
|
12.5
|
|
Net cash flows from investing activities
|
|
120.8
|
1,012.6
|
|
Cash flows
from financing
activities:
Repayment of borrowings
|
3.2
|
(48.3)
|
(21.5)
|
|
Lease payments
|
|
(2.2)
|
(2.5)
|
|
Dividends paid
|
7.1
|
(542.1)
|
-
|
|
Share repurchase
|
|
(18.9)
|
(528.6)
|
|
Other interest and
charges
|
|
(16.0)
|
(11.7)
|
|
Proceeds from issue of
shares
|
|
0.8
|
4.5
|
|
Cost of shares
purchased
|
|
(19.5)
|
(19.8)
|
|
Net cash flows used in financing activities
|
|
(646.2)
|
(579.6)
|
|
Net (decrease)/increase
in cash
and cash
equivalents
|
|
(565.3)
|
447.8
|
|
Opening cash and cash equivalents
at beginning of year
|
|
756.8
|
314.1
|
|
Foreign exchange differences
|
|
(2.0)
|
(5.1)
|
|
Closing cash and cash equivalents
|
3.1
|
189.5
|
756.8
|
Capricorn Energy PLC
Group Statement of Changes in
Equity
For the year ended 31 December
2023
|
|
Equity
share
capital
and
share
premium
|
Shares
held by
ESOP/
SIP
Trusts
|
Foreign
Currency
translation
|
Merger
and
capital
reserves
|
Retained
earnings
(restated)
|
Total
equity
(restated)
|
|
|
$m
|
$m
|
$m
|
$m
|
$m
|
$m
|
|
At 1
January 2022
|
503.5
|
(17.5)
|
(74.1)
|
40.9
|
1,345.8
|
1,798.6
|
|
Restatement
|
-
|
-
|
-
|
-
|
(76.9)
|
(76.9)
|
|
At 1 January 2022 - restated
|
503.5
|
(17.5)
|
(74.1)
|
40.9
|
1,268.9
|
1,721.7
|
|
|
|
|
|
|
|
|
|
Loss for the year
|
-
|
-
|
-
|
-
|
(67.1)
|
(67.1)
|
|
Currency translation difference
|
-
|
-
|
(16.7)
|
-
|
-
|
(16.7)
|
|
Total comprehensive expense
|
-
|
-
|
(16.7)
|
-
|
(67.1)
|
(83.8)
|
|
|
|
|
|
|
|
|
|
Share-based payments
|
-
|
-
|
-
|
-
|
10.5
|
10.5
|
|
Exercise of employee share options
|
4.5
|
-
|
-
|
-
|
-
|
4.5
|
|
Share repurchase
|
(4.6)
|
-
|
-
|
4.6
|
(511.5)
|
(511.5)
|
|
Cost of shares purchased
|
-
|
(19.8)
|
-
|
-
|
-
|
(19.8)
|
|
Cost of shares vesting
|
-
|
22.0
|
-
|
-
|
(22.0)
|
-
|
|
At 31 December 2022
|
503.4
|
(15.3)
|
(90.8)
|
45.5
|
678.8
|
1,121.6
|
|
Loss for the year
|
-
|
-
|
-
|
-
|
(144.0)
|
(144.0)
|
|
Currency translation
differences
|
-
|
-
|
5.1
|
-
|
-
|
5.1
|
|
Total comprehensive
income/(expense)
|
-
|
-
|
5.1
|
-
|
(144.0)
|
(138.9)
|
|
|
|
|
|
|
|
|
|
Dividends paid
|
-
|
-
|
-
|
-
|
(541.1)
|
(541.1)
|
|
Share repurchase
|
(0.4)
|
-
|
-
|
0.4
|
(18.9)
|
(18.9)
|
|
Share-based payments
|
-
|
-
|
-
|
-
|
2.5
|
2.5
|
|
Exercise of employee share
options
|
0.8
|
-
|
-
|
-
|
-
|
0.8
|
|
Share premium cancelled
|
(495.4)
|
-
|
-
|
-
|
495.4
|
-
|
|
Cost of shares
cancelled
|
-
|
(19.5)
|
-
|
-
|
-
|
(19.5)
|
|
Cost of shares vesting
|
-
|
28.5
|
-
|
-
|
(28.5)
|
-
|
|
At 31
December 2023
|
8.4
|
(6.3)
|
(85.7)
|
45.9
|
444.2
|
406.5
|
|
|
|
|
|
|
|
|
Section 1 - Basis of Preparation
1.1 Significant
Accounting Policies
a)
Basis of
preparation
The consolidated Financial
Statements of Capricorn Energy PLC ('Capricorn' or 'the Group') for
the year ended 31 December 2023 were authorised for issue in
accordance with a resolution of the Directors on
27 March 2024. Capricorn is a limited company incorporated
and domiciled in the United Kingdom whose shares are publicly
traded. The registered office is located at 50 Lothian Road,
Edinburgh, Scotland, EH3 9BY. The registered company number is
SC226712.
Capricorn prepares its Financial
Statements on a historical cost basis, unless accounting standards
require an alternate measurement basis. Where there are assets and
liabilities calculated on a different basis, this fact is disclosed
either in the relevant accounting policy or in the notes to the
Financial Statements. The Financial Statements comply with the
Companies Act 2006 as applicable to companies using UK-adopted
International Financial Reporting Standards ('IFRS').
During the current period, the
Company changed its accounting policy for intangible
exploration/appraisal assets as detailed in note 1.3. Comparative
information has been restated to reflect this change in policy. All
other accounting policies have been applied consistently across all
periods disclosed.
The Group's Financial Statements are
prepared on a going concern basis.
b)
Accounting standards
The Financial Statements of
Capricorn has been prepared in accordance with UK-adopted
International Accounting Standards and with the requirements of the
Companies Act 2006 as applicable to companies reporting under those
standards. During the year, no new standards or amendments to
standards were adopted that had a material impact on Capricorn's
results or Financial Statement disclosures.
There are no new standards or
amendments issued by the IASB and endorsed under the Companies Act,
which have yet to be adopted by the Group that will materially
impact the Group's Financial Statements.
c)
Annual report and accounts
Full accounts are due to be made available on the Company's
website in April 2024 and will be available at the Company's
registered office, 50 Lothian Road, Edinburgh, EH3 9BY. The Annual
General Meeting is due to be held on Thursday 23 May 2024 at
11am.
1.2 Going
Concern
The Directors have considered the
factors relevant to support a statement of going concern. In
assessing whether the going concern assumption is appropriate, the
Board considered the Group cash flow forecasts under various
scenarios, identifying risks and mitigating factors. Along with
base-case assumptions, a downside scenario run includes a return to
lower oil prices, with a 10% reduction to the forward curve over
2024 and an oil price of $60 per bbl from 2025 onward, a 10%
reduction in forecast production and further delays in settlement
of Egypt trade receivables. An oil-price crash scenario assumes a
fall in the oil price to $40 per bbl in Q1 2024 with a recovery of
$65 per bbl by the end of 2024. Under both scenarios the Group has
sufficient cash headroom to continue to operate as a going concern.
All scenarios assume a minimum return of $50m to shareholders in
2024.
As the Directors will not
commit to investing further funds into the Egypt business, separate
cash flow forecasts have been run for
Capricorn Egypt Limited, the Egypt
asset-holding subsidiary and the remaining Capricorn Energy PLC
Group. Capricorn Egypt is a party to the Junior and Senior
borrowing facilities entered in connection with the Group's Egypt
assets, however these facilities are non-recourse to the rest of
the Capricorn Group.
Under all scenarios run, the
Capricorn Group would continue to operate as a going concern with
sufficient cash balances, allowing the Group to meet its current
and contracted commitments outside Egypt as and when they fall due
for a period of at least 12 months from the date of signing these
Financial Statements.
In addition, Capricorn Egypt Limited
is forecast to have sufficient resources to meet its contractual
obligations as they fall due across all three scenarios, though
headroom is limited at certain points across the going concern
period. If any unforeseen changes in assumptions were to adversely
impact the subsidiary, and with no further injection of funds from
the parent, it may not be able to meet all debt repayments that
fall due in the period which could result in lenders taking control
of the assets. While the assets would then be heavily impaired to
expected recoverable amounts, the remaining Capricorn Energy PLC
Group would be unaffected and would continue as a going
concern.
Further, under the terms of the
borrowing facilities, Capricorn Egypt Limited jointly and severally
guarantee the performance of the
obligations of the joint venture
counterparty. Should the counterparty fail to meet its repayment
obligations, the lender could enforce this guarantee, though other
routes to recovery would be more likely. Though considered remote,
a default by the counterparty could also result in the lenders
assuming control of the Egypt subsidiary to recover amounts due.
Again, the remaining Capricorn Energy PLC Group would be unaffected
and would continue as a going concern.
The Board and Audit Committee
assessments of risk and mitigants to the Group's operational
existence beyond this 12-month period is included in the Viability
Statement.
Section 1 - Basis of Preparation (continued)
1.3 Restatement of Comparative
Information
Accounting Policy
Change
A change in policy from a
successful efforts-based accounting policy to a pure successful
efforts accounting policy for oil and gas assets has been adopted
from 1 January 2023, with retrospective application. Under the
revised policy, all non-well specific exploration costs, previously
capitalised within exploration assets, are now charged directly to
the Income Statement as incurred. The Directors believe that the
revised policy gives a clearer understanding of the performance of
the Group in any given period as the new policy is more closely
aligned to the general capitalisation requirement of the IFRS
framework, by only capitalising costs associated within exploration
assets that directly relate to commercial discoveries of
hydrocarbons. In addition, costs associated with Near Field
Exploration (NFE) wells, which are appraisal wells within the
existing development areas, are now capitalised immediately within
development/producing assets, given that, if successful they start
producing immediately. The Directors believe these changes will
provide more reliable and relevant information on the Group's
financial performance in a period and more importantly the value of
exploration assets held at the balance sheet date.
The result of the change in
accounting policy is that going forward, only costs of commercially
successful exploration wells in Egypt projects are expected to be
capitalised within exploration assets given the change in the
Group's future strategy to focus on maximising value from these
assets. The policy change has been applied retrospectively and
restatement of the intangible exploration/appraisal assets, Income
Statement, Balance Sheet, and Statement of Cash Flows including the
comparative periods is presented in the tables below.
Adjustments recognised on
adoption from successful efforts-based to a pure successful
efforts-based costs policy. A reconciliation of the change to
intangible exploration/appraisal assets is as follows:
|
|
Intangible Exploration/
Appraisal assets
old
policy
$m
|
Accounting policy change
$m
|
Intangible Exploration/
Appraisal assets
new
policy
$m
|
|
Cost
At 1
January 2022
|
117.9
|
(88.5)
|
29.4
|
|
Additions
|
90.4
|
(53.0)
|
37.4
|
|
Unsuccessful exploration costs
|
(113.1)
|
47.3
|
(65.8)
|
|
At 31 December 2022
|
95.2
|
(94.2)
|
1.0
|
|
Additions
|
57.1
|
(35.1)
|
22.0
|
|
Unsuccessful exploration costs
|
(109.3)
|
88.8
|
(20.5)
|
|
At 31
December 2023
|
43.0
|
(40.5)
|
2.5
|
|
Impairment
At 1
January 2022
|
19.6
|
(11.6)
|
8.0
|
|
Unsuccessful exploration
costs
|
(19.6)
|
11.6
|
(8.0)
|
|
At 31
December 2022 and 31 December
2023
|
-
|
-
|
-
|
|
Net book
value
|
|
|
|
|
At 31 December 2021
|
98.3
|
(76.9)
|
21.4
|
|
At 31 December 2022
|
95.2
|
(94.2)
|
1.0
|
|
At 31
December 2023
|
43.0
|
(40.5)
|
2.5
|
Of the $40.5m accounting policy
adjustment $28.0m relates to the expensing of general exploration
costs relating to Mauritania, Suriname and in the UK as well as
non-well costs in Egypt in the current and prior years. The
remaining $12.5m is due to the reallocation of NFE costs into
development/producing assets.
Section 1 - Basis of Preparation (continued)
1.3 Restatement of Comparative
Information (continued)
Prior Year
Restatement
At 31 December 2022, Capricorn
reversed accruals of $29.2m relating to opening balances recognised
on acquisition of the Group's Egypt development/producing assets.
The seller had provided insufficient information to allow the
reconciliation of opening balances to subsequent costs and the
operator had declined to perform such an exercise. With no
supporting evidence to continue to accrue these opening costs, the
amounts were reversed as a cost adjustment against property, plant
& equipment - development/producing assets.
Early in 2024 and in light of
concerns that accounts payable balances may be understated,
Capricorn were able to access the underlying accounting records of
Bapetco who maintain the gross accounting records of the joint
operations on behalf of the operator. The subsequent
reconciliations performed by Capricorn of those Bapetco gross
numbers to the working interest working capital balances recorded
in Capricorn's accounting records, identified an under accrual
equivalent to the amounts reversed opening balance cost adjustment
processed in 2022.
The 2022 adjustment has therefore
been reversed resulting in an increase to the prior year carrying
value of property, plant & equipment - development/producing
assets and an increase in working capital balances relating to
joint operations equal to the $29.2m. The increase in the carrying
value of assets had a subsequent impact on the 2022 depletion
charge for the prior year and the related deferred tax credit,
though there was no material impact on the prior year impairment
charge, which remains unchanged.
1.3.1 Group Income
Statement Accounting Policy Changes and Prior Year
Restatement
For the year ended 31 December
2023:
|
Income Statement (extract)
|
Note
|
Year ended
31
December
2023
$m
|
Accounting
policy
change
$m
|
Year ended
31 December
2023
(restated)
$m
|
|
Continuing operations
|
|
|
|
|
|
General exploration costs
|
|
-
|
(26.9)
|
(26.9)
|
|
Unsuccessful exploration well costs
|
2.2
|
(109.3)
|
88.8
|
(20.5)
|
|
Impairment of property, plant & equipment - development/producing assets
|
2.3
|
(25.0)
|
(4.1)
|
(29.1)
|
|
Impairment of goodwill
|
2.4
|
(11.7)
|
(2.9)
|
(14.6)
|
|
Operating loss
|
|
(142.3)
|
54.9
|
(87.4)
|
|
Loss before
taxation from
continuing operations
|
|
(157.0)
|
54.9
|
(102.1)
|
|
Tax charge
|
5.2
|
(33.8)
|
(6.7)
|
(40.5)
|
|
Loss from continuing operations
|
|
(190.8)
|
48.2
|
(142.6)
|
Both basic and diluted earnings
per share increased by $0.25 per share for the period ended 31
December 2023.
For the year ended 31 December
2022:
|
Income Statement (extract)
|
Note
|
Year
ended
31
December 2022
As
originally presented
$m
|
Accounting
policy
change
$m
|
Prior
year restatement
$m
|
Year
ended
31
December 2022
(restated)
$m
|
|
Continuing operations
|
|
|
|
|
|
|
Depletion charge
|
|
(124.1)
|
-
|
(7.2)
|
(131.3)
|
|
Gross Profit
|
|
89.1
|
-
|
(7.2)
|
81.9
|
|
General exploration costs
|
|
-
|
(48.7)
|
-
|
(48.7)
|
|
Unsuccessful exploration well costs
|
2.2
|
(93.5)
|
35.7
|
-
|
(57.8)
|
|
Operating loss
|
|
(115.4)
|
(13.0)
|
(7.2)
|
(135.6)
|
|
Loss before taxation from continuing operations
|
|
(128.3)
|
(13.0)
|
(7.2)
|
(148.5)
|
|
Tax charge
|
5.2
|
(32.0)
|
1.3
|
2.8
|
(27.9)
|
|
Loss from continuing operations
|
|
(160.3)
|
(11.7)
|
(4.4)
|
(176.4)
|
Both basic and diluted earnings
per share decreased by $0.03 per share for the year ended 31
December 2022.
Section 1 - Basis of Preparation (continued)
1.3 Restatement of
Comparative Information (continued)
1.3.2 Group Balance Sheet
Accounting Policy Change and Prior Year
Restatement
As at 31 December
2023:
|
Balance Sheet (extract)
|
|
|
At
31
December
2023
$m
|
Accounting policy change
$m
|
At
31 December
2023
(restated)
$m
|
|
Non-current Assets
|
|
|
|
|
|
|
Intangible exploration/appraisal
assets
|
|
|
43.0
|
(40.5)
|
2.5
|
|
Property, plant & equipment - development/producing assets
|
|
|
209.2
|
8.4
|
217.6
|
|
Goodwill
|
|
|
13.7
|
(2.9)
|
10.8
|
|
Deferred tax asset
|
|
|
9.3
|
(1.7)
|
7.6
|
|
|
|
|
275.2
|
(36.7)
|
238.5
|
|
Non-current liabilities
Deferred tax liabilities
|
|
|
(5.9)
|
(3.7)
|
(9.6)
|
|
Net assets
|
|
|
446.9
|
(40.4)
|
406.5
|
|
Equity
Retained earnings
|
|
|
484.6
|
(40.4)
|
444.2
|
|
Total equity
|
|
|
446.9
|
(40.4)
|
406.5
|
As at 31 December
2022:
|
Balance Sheet (extract)
|
|
At
31
December 2022
As originally presented
$m
|
Accounting policy change
$m
|
Prior Year Restatement
$m
|
At
31
December 2022
(restated)
$m
|
|
Non-current assets
Intangible exploration/appraisal assets
|
|
95.2
|
(94.2)
|
-
|
1.0
|
|
Property, plant & equipment - development/producing assets
|
|
249.5
|
4.3
|
22.0
|
275.8
|
|
Deferred tax assets
|
|
7.1
|
0.5
|
1.1
|
8.7
|
|
|
|
351.8
|
(89.4)
|
23.1
|
285.5
|
|
Current liabilities
|
|
|
|
|
|
|
Trade and other payables
|
|
(55.7)
|
-
|
(29.2)
|
(84.9)
|
|
Non-current liabilities Deferred tax
liabilities
|
|
(30.9)
|
0.8
|
1.7
|
(28.4)
|
|
|
|
(86.6)
|
0.8
|
(27.5)
|
(113.3)
|
|
Net assets
|
|
1,214.6
|
(88.6)
|
(4.4)
|
1,121.6
|
|
Equity
Retained earnings
|
|
771.8
|
(88.6)
|
(4.4)
|
678.8
|
|
Total equity
|
|
1,214.6
|
(88.6)
|
(4.4)
|
1,121.6
|
Section 1 - Basis of Preparation (continued)
1.3 Restatement of
Comparative Information (continued)
1.3.3 Group Statement of Cash
Flows Accounting Policy Change and Prior Year
Restatement
For the year ended 31 December
2023:
|
Statement of Cash Flows (extract)
|
Year ended
31 December
2023
$m
|
Accounting
policy
change
$m
|
Year ended
31 December
2023
(restated)
$m
|
|
Cash Flows from operating activities:
|
|
|
|
|
Loss before taxation from continuing operations
|
(157.0)
|
54.9
|
(102.1)
|
|
Adjustments for
non-cash income
and expense
and non-operating
cash flows:
|
|
|
|
|
Impairment of property, plant & equipment - development/producing assets
|
25.0
|
4.1
|
29.1
|
|
Impairment of goodwill
|
11.7
|
2.9
|
14.6
|
|
Unsuccessful exploration costs
|
109.3
|
(88.8)
|
20.5
|
|
Net cash
flows used
in
operating activities
|
(13.0)
|
(26.9)
|
(39.9)
|
|
Cash flows
from investing
activities:
|
|
|
|
|
Expenditure in intangible exploration/appraisal assets
|
(43.3)
|
26.9
|
(16.4)
|
|
Net cash
flows from
investing activities
|
93.9
|
26.9
|
120.8
|
|
Net decrease
in
cash and
cash equivalent
|
(565.3)
|
-
|
(565.3)
|
As at 31 December
2022:
|
|
|
|
|
|
|
Statement of Cash Flows (extract)
|
Year
ended
31
December
2022
As
originally
presented
$m
|
Accounting policy change
$m
|
Prior
Year Restatement
$m
|
31
December 2022
(restated)
$m
|
|
Cash flows from operating activities:
|
|
|
|
|
|
Loss before taxation from continuing operations
|
(128.3)
|
(13.0)
|
(7.2)
|
(148.5)
|
|
Adjustments for non-cash income and expense and non-operating cash flows:
|
|
|
|
|
|
Depreciation, depletion and amortisation
|
|
129.9
|
-
|
7.2
|
137.1
|
|
Unsuccessful exploration costs
|
|
93.5
|
(35.7)
|
-
|
57.8
|
|
Net cash flows from operating activities
|
|
63.5
|
(48.7)
|
-
|
14.8
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
Expenditure in intangible exploration/appraisal assets
|
|
(94.9)
|
48.7
|
-
|
(46.2)
|
|
Net cash flows used in investing activities
|
|
963.9
|
48.7
|
-
|
1,012.6
|
|
Net increase in cash and cash equivalent
|
|
447.8
|
-
|
-
|
447.8
|
Section 2 - Oil and
Gas Assets and Operations
2.1 Gross Profit: Revenue
and Cost of Sales
|
|
Year ended
31
December
2023
|
Year
ended
31
December
(restated)
2022
|
|
|
$m
|
$m
|
|
Oil sales
|
159.1
|
181.4
|
|
Gas sales
|
40.8
|
47.5
|
|
Revenue from oil and gas sales
|
199.9
|
228.9
|
|
Royalty income
|
1.1
|
0.7
|
|
Total revenue
|
201.0
|
229.6
|
|
|
|
|
|
Other Income - Tax entitlement
volumes
|
54.1
|
54.8
|
|
Other Income
|
54.1
|
54.8
|
|
|
|
|
|
Production costs and inventory
movements
|
(59.6)
|
(71.2)
|
|
Cost of sales
|
(59.6)
|
(71.2)
|
|
|
|
|
|
Depletion (note 2.3)
|
(120.4)
|
(131.3)
|
|
Gross profit
|
75.1
|
81.9
|
Revenue
Capricorn receives oil and gas
revenue from eight producing concessions in Egypt, based on an
entitlement interest. Payment terms are within 30 days from the
date of the invoice for oil sales and 45 days from the date of the
invoice for gas sales.
Oil and gas revenue in Egypt for the
year ended 31 December 2023 was $199.9m (2022: $228.9m), from net
entitlement production of 4.4 mmboe (2022: 4.7 mmboe) of which ~45%
(2022: ~39%) was liquids. Oil sales averaged $81.2/boe (2022:
$98.8/boe) and with gas sales fixed at $2.9/mcf (2022: $2.9/mcf).
Other income represents tax paid on Capricorn's behalf by
EGPC.
Production costs over the period
were $59.6m (2022: $71.2m), or $5.4/boe (2022: $5.7/boe) (on a
working interest ("WI") basis).
Section 2 - Oil and Gas Assets
and Operations (continued)
2.2 Intangible
Exploration/Appraisal Assets
|
|
Egypt (restated)
$m
|
Mexico (restated)
$m
|
UK
(restated)
$m
|
Total
(restated)
$m
|
|
Cost
At 1 January 2022
|
-
|
25.2
|
4.2
|
29.4
|
|
Additions
|
-
|
1.2
|
36.2
|
37.4
|
|
Unsuccessful exploration costs
|
-
|
(25.4)
|
(40.4)
|
(65.8)
|
|
At 31 December 2022
|
-
|
1.0
|
-
|
1.0
|
|
Additions
|
5.1
|
15.0
|
1.9
|
22.0
|
|
Unsuccessful exploration costs
|
(2.6)
|
(16.0)
|
(1.9)
|
(20.5)
|
|
At 31
December 2023
|
2.5
|
-
|
-
|
2.5
|
|
Impairment
At 1 January 2022
|
-
|
8.0
|
-
|
8.0
|
|
Unsuccessful exploration costs
|
-
|
(8.0)
|
-
|
(8.0)
|
|
At 31
December 2022
and 31
December 2023
|
-
|
-
|
-
|
-
|
|
Net book value
|
|
|
|
|
|
At 31 December 2021
|
-
|
17.2
|
4.2
|
21.4
|
|
At 31 December 2022
|
-
|
1.0
|
-
|
1.0
|
|
At 31
December 2023
|
2.5
|
-
|
-
|
2.5
|
A change in policy from a successful
efforts-based accounting policy to a pure successful efforts
accounting policy for oil and gas assets has been adopted from 1
January 2023. As a result of the accounting policy change, the
figures for 2022 period have been restated. For more details, see
note 1.3.
Additions to intangible
exploration/appraisal assets were funded through cash and working
capital.
Egypt
Additions in Egypt of $5.1m relate
to direct costs on future exploration wells in the South-East Horus
concession area. Additions and unsuccessful efforts of $2.6m
relates to drilling costs of unsuccessful wells in SAS concession
area.
Mexico
In Mexico additions for the year of
$15.0m relate to Block 7 drilling costs, where the Yatzil well
completed in 2023 and was unsuccessful. The total drilling costs of
$16.0m was recognised as unsuccessful exploration costs in
2023.
UK
The additions of $1.9m relate to
costs incurred of $0.2m and an increase of $1.7m in relation to
further estimated Tybalt well abandonment costs. Prior year
additions and unsuccessful exploration costs relate to the Jaws and
Diadem wells completed in that year.
Section 2 - Oil and Gas Assets
and Operations (continued)
2.3 Property, Plant &
Equipment - Development/Producing Assets
|
|
Egypt
(restated)
$m
|
|
Cost
At 1 January 2022
|
405.1
|
|
Additions
|
75.8
|
|
At 31 December 2022
|
480.9
|
|
Additions
|
91.3
|
|
At 31
December 2023
|
572.2
|
|
Depletion and
impairment
At 1 January 2022
|
31.2
|
|
Depletion charge
|
131.3
|
|
Impairment
|
42.6
|
|
At 31 December 2022
|
205.1
|
|
Depletion charge
|
120.4
|
|
Impairment
|
29.1
|
|
At 31
December 2023
|
354.6
|
|
Net book value
|
|
|
At 31 December 2021
|
373.9
|
|
At 31 December 2022
|
275.8
|
|
At 31
December 2023
|
217.6
|
Egypt
Capricorn acquired its
development/producing assets in Egypt through a business
combination in 2021. Subsequent expenditure on development
activities across the concessions totaled $177.7m up to 2023
year-end. The 2022 other cost adjustments of $29.2m credited to
development assets has been removed as a prior year restatement.
See note 1.3.
Additions have been funded through
cash and working capital.
Depletion of $120.4m (2022:
$131.3m) was charged to the Income Statement based on entitlement
interest production during the year. The costs for depletion
include future capital costs-to-complete consistent with the
life-of-field reserve estimates used in the calculation.
Impairment review
The Group's development/producing
assets in Egypt were reviewed for indicators of impairment.
Impairment reviews are conducted
by combining concessions into four
concession areas. Indicators were identified where a pause in
development drilling activity has
resulted in downgrades to reserves
volumes booked. Subsequent impairment tests identified an
impairment of $29.1m across the
AESW and NEAG concession areas.
Prior year impairment of $42.6m across the AESW and Obaiyed
concession areas resulted from poor performance from wells drilled
in the period and a subsequent reserves downgrade.
2.4
Goodwill
|
|
Egypt
$m
|
|
At 1 January 2022 and 31 December
2022
|
25.4
|
|
Impairment
|
(14.6)
|
|
At
31 December 2023
|
10.8
|
Goodwill arose on the acquisition
of the Western Desert assets in Egypt in 2021. Goodwill has been
tested for impairment at 31 December 2023 and an impairment of
$14.6m was recorded as a result of reserves downgrades at the
year-end.
Section 3 - Working Capital,
Financial Instruments and Long-term Liabilities
3.1 Cash and Cash
Equivalents
|
|
At
31
December
2023
|
At
31
December
2022
|
|
|
$m
|
$m
|
|
Cash at bank
|
12.8
|
63.4
|
|
Bank deposit less than three
months
|
20.0
|
298.0
|
|
Money market funds
|
156.7
|
395.4
|
|
|
189.5
|
756.8
|
At 31 December 2023, $10.6m (2022:
$52.5m) of cash and cash equivalents are restricted and not
available for immediate ordinary business use. This includes $5.6m
(2022: $43.5m) of cash and cash equivalents in Egypt.
3.2 Loans and
Borrowings
|
|
Year ended
31
December
2023
|
Year
ended
31
December
2022
|
|
Reconciliation of opening and closing liabilities to cash
flow movements:
|
$m
|
$m
|
|
Opening liabilities
|
158.6
|
177.0
|
|
|
|
|
|
Loan repayments disclosed in the Cash Flow
Statement:
|
|
|
|
Senior Debt Facility
|
(48.3)
|
(21.5)
|
|
|
|
|
|
Non-cash movements:
|
|
|
|
Accrued debt facility
interest
|
0.6
|
2.2
|
|
Amortisation of debt arrangement
fees
|
0.9
|
0.9
|
|
Closing liabilities
|
111.8
|
158.6
|
|
|
|
|
|
Amounts due less than one year
|
15.4
|
25.4
|
|
Amount due greater than one year
|
96.4
|
133.2
|
|
Closing liabilities
|
111.8
|
158.6
|
Capricorn Egypt Debt Facilities
In September 2021, Capricorn Egypt Limited entered into a $325.0m Senior Debt Facility and an $80.0m Junior Debt Facility jointly with Cheiron,
the joint
operation partner
in Egypt,
to finance
the acquisition
of the
Egyptian Western
Desert Portfolio.
The facility
commitments are split 50:50 with Cheiron. Facility commitments
began amortising
in September
2022 and
the maximum
drawdown available to Capricorn at 31 December 2023 was $73.6m (2022: $119.9m) for the Senior Debt Facility and $40.0m (2022: $40.0m) for the Junior Debt Facility.
At the date of approval of these
financial statements, Capricorn and Cheiron are seeking waivers
from the lenders for potential events of default under the
facilities, all related to a lack of a payment plan from EGPC for
resolving the trade receivables position.
Section 3 - Working Capital,
Financial Instruments and Long-term Liabilities
(continued)
3.3 Trade and Other
receivables
|
|
At
31
December
2023
|
At
31
December
2022
|
|
|
$m
|
$m
|
|
Trade receivables
|
168.5
|
96.9
|
|
Other receivables
|
11.0
|
19.6
|
|
Prepayments
|
1.5
|
5.3
|
|
Joint operation
receivables
|
5.0
|
20.7
|
|
|
186.0
|
142.5
|
Trade receivables relate to the
Group's producing assets in Egypt. Capricorn remains in discussions
with EGPC and the operator to manage the receivables position and
Capricorn will not commit to further investment in Egypt until a
payment plan is agreed. At 31 December 2023, the expected credit
loss adjustment offsetting receivables has increased to $9.0m
(2022: $1.0m).
Trade receivables are initially
recorded at fair value, adjusting for expected credit losses, and
subsequently measured at amortised cost. Revenue is recognised at
the point in time where title passes to the customer and payment
becomes unconditional. The fair value measurement of revenue for
oil and gas sales in Egypt includes adjustments to invoiced
quantities for expected entitlement share adjustments.
Other receivables balance of
$11.0m (2022: $19.6m) includes interventure receivables of $1.4m
(2022: $9.1m), VAT recoverable in the UK and Mexico of $3.6m (2022:
$4.4m), money market interest receivable of $0.6m (2022: $3.3m) and
earnout receivable of $2.0m (2022: $nil).
|
Reconciliation of
opening and
closing receivables
to
operating cash
flow movements:
|
Year ended
31
December
2023
$m
|
Year
ended
31
December
2022
$m
|
|
Opening trade and other
receivables
|
142.5
|
1,211.2
|
|
Closing trade and other receivables
|
(186.0)
|
(142.5)
|
|
Decrease/(Increase)
in trade
and other
receivables
|
(43.5)
|
1,068.7
|
|
Foreign exchange
|
(1.2)
|
(17.3)
|
|
India tax refund received
|
-
|
(1,056.0)
|
|
Decrease in joint operation receivables
relating to
investing activities
|
(18.5)
|
(27.7)
|
|
Decrease in other receivables relating
to investing
activities
|
(4.2)
|
(8.7)
|
|
(Decrease)/Increase
in prepayments
relating to
investing activities
|
(2.2)
|
0.6
|
|
(Decrease)/Increase
in prepayments
and other
receivables relating to financing activities
|
(1.4)
|
1.7
|
|
Trade and other receivables recognised
on earnout
disposal of
the UK
assets
|
2.0
|
-
|
|
Trade and
other receivables
cash flow
movement
|
(69.0)
|
(38.7)
|
The movements in joint operation receivables relating
to investing
activities relate
to the
Group's share
of the
receivables of
joint operations
in respect
of exploration,
appraisal and
development activities.
Section 3 - Working Capital,
Financial Instruments and Long-term Liabilities
(continued)
3.4
Financial Assets and Financial
Liabilities at Fair Value Through Profit or Loss
|
|
At
31
December
2023
|
At
31
December
2022
|
|
Financial assets
|
$m
|
$m
|
|
Non-current assets
|
|
|
|
Financial assets at fair value
through profit or loss - earnout consideration
|
-
|
89.7
|
|
Financial assets at fair value
through profit or loss - non-listed investment fund
|
-
|
6.5
|
|
|
-
|
96.2
|
|
Current assets
|
|
|
|
Financial assets at fair value
through profit or loss - earnout consideration
|
-
|
134.4
|
|
|
-
|
134.4
|
Financial assets at fair value
through profit or loss - Earnout consideration
On 18 December 2023, Capricorn
reached a settlement agreement with Waldorf Petroleum whereby all
future earnout consideration due to Capricorn was settled by an
immediate payment of $48.0m, a further $2.0m to be received on 1
April 2024, $22.5m to be received on 3 January 2025 and the
transfer of Waldorf's 25% WI share in the Columbus producing asset
in the UK North Sea to Capricorn. The transfer of Columbus is
subject to approval from the NSTA. The settlement agreement
provides for an additional payment of $7.0m should the necessary
approvals not be received. There is therefore no financial asset at
fair value through profit to loss in relation to the earnout
consideration at 31 December 2023. Details of the loss on disposal
of the financial assets can be found in note 6.1.
On 31 March 2023, Capricorn
received $136.7m in full settlement of the 2022 earnout
consideration due with interest from 1 January 2023 of $2.3m. See
note 6.1 for further detail.
Financial assets at fair value
through profit or loss - Listed equity investments
In 2021, Capricorn invested $6.9m
into a non-listed trust in India and with a minimum investment
period of five years, this is recorded as a non-current financial
asset and measured at fair value. In 2023, the Group entered into
an agreement to release Capricorn from the minimum investment
period and dispose of its investment for $3.2m and the asset is now
reclassified as an asset held-for-sale at the balance sheet date,
after testing for impairment.
In March 2022, the Group sold its
remaining shareholding in Vedanta, listed in India, for INR968m
($12.8m).
|
|
At
31
December
2023
|
At
31
December
2022
|
|
Financial liabilities
|
$m
|
$m
|
|
Non-current liabilities
|
|
|
|
Financial liabilities at fair value
through profit or loss - deferred consideration on business
combination
|
(19.8)
|
(49.1)
|
|
|
(19.8)
|
(49.1)
|
|
Current liabilities
|
|
|
|
Financial liabilities at fair value
through profit or loss - deferred consideration on business
combination
|
(25.0)
|
(25.0)
|
|
|
(25.0)
|
(25.0)
|
Financial liabilities at fair
value through profit or loss - deferred consideration on business
combination
Deferred consideration is due to
Shell following the Egypt business combination in 2021. Amounts due
are determined by the average annual dated Brent oil price for each
year up to 2024, with a maximum $50.0m due for each year, split
50:50 between Capricorn and Cheiron, if the average price exceeds
$75/bbl. The full $25.0m was payable in respect of 2022 and was
settled in January 2023. Capricorn and Cheiron are in discussions
with Shell regarding settlement of the $25m due for the
2023.
The fair value of the liability in
respect of remaining years is based on third-party mark-to-market
valuations. During the year, the Group made a loss of $8.0m (2022:
$12.7m) on fair value movements increasing the
liability.
Section 3 - Working Capital,
Financial Instruments and Long-term Liabilities
(continued)
3.5
Trade and Other Payables
|
|
At
31
December
2023
|
At
31
December
2022
(restated)
|
|
|
$m
|
$m
|
|
Trade payables
|
0.3
|
1.5
|
|
Other taxation and social
security
|
0.5
|
1.9
|
|
Accruals and other
payables
|
7.9
|
21.6
|
|
Joint operation
payables
|
73.3
|
30.7
|
|
|
82.0
|
55.7
|
Joint operation payables include
$6.4m (2022: $18.3m) and $66.9m (2022: $41.6m) relating to
exploration/appraisal asset and development/producing asset costs
respectively.
|
|
At
31
December
2023
|
At
31
December
2022
(restated)
|
|
Reconciliation of
opening and
closing payables
to operating
cash flow
movements:
|
$m
|
$m
|
|
Opening trade and other
payables
|
(84.9)
|
(152.2)
|
|
Closing trade and other payables
|
82.0
|
84.9
|
|
Decrease in trade and other payables
|
(2.9)
|
(67.3)
|
|
Foreign exchange
|
1.6
|
3.4
|
|
Decrease in trade payables relating
to investing
activities
|
0.7
|
0.5
|
|
(Increase)/Decrease
in joint
operation payables relating
to investing
activities
|
(38.1)
|
32.4
|
|
Decrease in accruals and other payables relating
to investing
activities
|
-
|
3.0
|
|
Decrease/(Increase)
in accruals
and other
payables relating
to financing
activities
|
0.1
|
(0.5)
|
|
Decrease in accruals and other payables relating
to other
non-operating activities
|
-
|
18.7
|
|
Trade and
other payables
movement recorded
in
operating cash
flows
|
(38.6)
|
(9.8)
|
Movements above for investing activities
relate to
exploration, appraisal and development activities
through the
Group's joint
operations. Movements relating to production activities
are included
in amounts
through operating
cash flows.
The movement
in accruals
and other
payables relating
to other
non-operating activities is in relation to the share repurchase.
Section 4 - Income Statement
Analysis
4.1 Segmental
Analysis
The segment results for the year
ended 31 December 2023 are as follows:
|
|
Egypt
$m
|
Mexico
$m
|
Other
Countries
$m
|
Other
Capricorn Energy Group
$m
|
Total
$m
|
|
Revenue
|
199.9
|
-
|
-
|
1.1
|
201.0
|
|
Other income
|
54.1
|
-
|
-
|
-
|
54.1
|
|
Cost of sales
|
(59.6)
|
-
|
-
|
-
|
(59.6)
|
|
Depletion charges
|
(120.4)
|
-
|
-
|
-
|
(120.4)
|
|
Gross profit
|
74.0
|
-
|
-
|
1.1
|
75.1
|
|
Pre-award costs
|
(0.7)
|
-
|
-
|
(0.4)
|
(1.1)
|
|
General exploration costs
|
(10.4)
|
(10.3)
|
(6.2)
|
-
|
(26.9)
|
|
Unsuccessful exploration costs
|
(2.6)
|
(16.0)
|
(1.9)
|
-
|
(20.5)
|
|
Impairment of property, plant & equipment - development/producing assets
|
(29.1)
|
-
|
-
|
-
|
(29.1)
|
|
Impairment of goodwill
|
(14.6)
|
-
|
-
|
-
|
(14.6)
|
|
Expected credit loss adjustment on revenue receivable
|
(9.0)
|
-
|
-
|
-
|
(9.0)
|
|
Other operating income
|
-
|
-
|
-
|
0.6
|
0.6
|
|
Depreciation - purchased assets
|
-
|
-
|
-
|
(0.2)
|
(0.2)
|
|
Amortisation - right-of-use assets
|
(0.3)
|
-
|
-
|
(2.3)
|
(2.6)
|
|
Amortisation of other intangible assets
|
-
|
(0.3)
|
-
|
(3.6)
|
(3.9)
|
|
Other administrative expenses
|
(1.9)
|
(2.9)
|
(0.1)
|
(50.3)
|
(55.2)
|
|
Operating profit/(loss)
|
5.4
|
(29.5)
|
(8.2)
|
(55.1)
|
(87.4)
|
|
Fair value loss - deferred consideration
|
(8.0)
|
-
|
-
|
-
|
(8.0)
|
|
Gain on financial assets at fair value through profit or loss
|
-
|
-
|
-
|
0.8
|
0.8
|
|
Impairment of an asset held-for-sale
|
-
|
-
|
-
|
(4.0)
|
(4.0)
|
|
Interest income
|
0.4
|
-
|
0.1
|
19.9
|
20.4
|
|
Interest expense
|
(15.0)
|
-
|
-
|
(0.5)
|
(15.5)
|
|
Other net finance (expense)/income
|
(2.7)
|
1.7
|
(0.5)
|
(6.9)
|
(8.4)
|
|
Loss before
tax from
continuing operations
|
(19.9)
|
(27.8)
|
(8.6)
|
(45.8)
|
(102.1)
|
|
Tax charge
|
(40.5)
|
-
|
-
|
-
|
(40.5)
|
|
Loss for
the year
from continuing
operations
|
(60.4)
|
(27.8)
|
(8.6)
|
(45.8)
|
(142.6)
|
|
Loss from discontinued
operations
|
-
|
-
|
-
|
(1.4)
|
(1.4)
|
|
Loss attributable
to
equity holders
of
the Parent
|
(60.4)
|
(27.8)
|
(8.6)
|
(47.2)
|
(144.0)
|
|
Balances as
at
31
December 2023:
Capital
expenditure
|
96.4
|
15.0
|
1.9
|
1.9
|
115.2
|
|
Total assets
|
426.8
|
8.6
|
29.8
|
202.4
|
667.6
|
|
Total liabilities
|
237.2
|
5.2
|
5.9
|
12.8
|
261.1
|
|
Non-current assets
|
232.0
|
0.2
|
27.6
|
13.2
|
273.0
|
Revenue in the Egypt segment
contains revenue generated from eight concessions in the Western
Desert, onshore The Arab Republic of Egypt. 93.5% ($183.0m) of
revenue related to sales to a single customer.
All transactions between segments
are carried out on an arm's length basis.
Section 4 - Income Statement
Analysis (continued)
4.1 Segmental Analysis
(continued)
The segment results for the year ended 31 December 2022 were as follows:
|
|
Egypt (restated)
$m
|
Mexico (restated)
$m
|
UK
(restated)
$m
|
Other Countries
(restated)
$m
|
Other
Capricorn Energy Group
$m
|
Total (restated)
$m
|
|
Revenue
|
228.9
|
-
|
-
|
-
|
0.7
|
229.6
|
|
|
Other income
|
54.8
|
-
|
-
|
-
|
-
|
54.8
|
|
|
Cost of sales
|
(71.2)
|
-
|
-
|
-
|
-
|
(71.2)
|
|
|
Depletion charges
|
(131.3)
|
-
|
-
|
-
|
-
|
(131.3)
|
|
|
Gross profit
|
81.2
|
-
|
-
|
-
|
0.7
|
81.9
|
|
|
Pre-award costs
|
(2.8)
|
-
|
(0.8)
|
-
|
(5.6)
|
(9.2)
|
|
|
Unsuccessful exploration costs
|
-
|
(17.4)
|
(40.4)
|
-
|
-
|
(57.8)
|
|
|
General exploration costs
|
(18.3)
|
(10.1)
|
(8.3)
|
(12.0)
|
-
|
(48.7)
|
|
|
Impairment of property, plant & equipment - development/producing assets
|
(42.6)
|
-
|
-
|
-
|
-
|
(42.6)
|
|
|
Other operating income and expenses
|
4.0
|
-
|
-
|
-
|
1.8
|
5.8
|
|
|
Depreciation - purchased assets
|
-
|
-
|
-
|
-
|
(0.3)
|
(0.3)
|
|
|
Amortisation - right-of-use assets
|
(0.1)
|
(0.1)
|
-
|
-
|
(1.8)
|
(2.0)
|
|
|
Amortisation of other intangible assets
|
-
|
(0.3)
|
-
|
-
|
(3.2)
|
(3.5)
|
|
|
Other administrative expenses
|
(0.8)
|
(1.5)
|
-
|
-
|
(56.9)
|
(59.2)
|
|
|
Operating profit/(loss)
|
20.6
|
(29.4)
|
(49.5)
|
(12.0)
|
(65.3)
|
(135.6)
|
|
|
Fair value loss - deferred consideration
|
(12.7)
|
-
|
-
|
-
|
-
|
(12.7)
|
|
|
Gain on financial assets at fair value through profit or loss
|
-
|
-
|
-
|
-
|
2.3
|
2.3
|
|
|
Interest income
|
0.3
|
2.3
|
-
|
-
|
12.4
|
15.0
|
|
|
Interest expense
|
(13.2)
|
-
|
-
|
-
|
(0.2)
|
(13.4)
|
|
|
Other net finance (expense)/income
|
(8.5)
|
0.7
|
2.1
|
0.1
|
1.5
|
(4.1)
|
|
|
Loss before tax from continuing operations
|
(13.5)
|
(26.4)
|
(47.4)
|
(11.9)
|
(49.3)
|
(148.5)
|
|
|
Tax charge
|
(27.7)
|
-
|
-
|
-
|
(0.2)
|
(27.9)
|
|
|
Loss for the year from continuing operations
|
(41.2)
|
(26.4)
|
(47.4)
|
(11.9)
|
(49.5)
|
(176.4)
|
|
|
Profit from discontinued
operations
|
-
|
-
|
-
|
-
|
109.3
|
109.3
|
|
|
(Loss)/Profit attributable to equity holders of the Parent
|
(41.2)
|
(26.4)
|
(47.4)
|
(11.9)
|
59.8
|
(67.1)
|
|
|
Balances as at 31 December 2022:
|
|
|
|
|
|
|
|
|
Capital expenditure
|
75.8
|
1.2
|
36.2
|
-
|
10.7
|
123.9
|
|
|
Total assets
|
478.8
|
21.3
|
226.5
|
0.1
|
736.3
|
1,463.0
|
|
|
Total liabilities
|
299.4
|
5.4
|
10.6
|
1.7
|
24.3
|
341.4
|
|
|
Non-current assets
|
302.9
|
1.5
|
-
|
-
|
11.9
|
316.3
|
|
Revenue in the Egypt segment contains revenue generated from eight concessions
in the
Western Desert,
onshore The
Arab Republic
of Egypt.
90.8% ($207.7m)
of revenue
related to
sales to
a single
customer.
All transactions between
the segments
are carried
out on an arm's length basis.
Section 4 - Income Statement
Analysis (continued)
4.2 Administrative and
Other Expenses
|
|
Year ended
31
December
2023
$m
|
Year
ended
31
December
2022
$m
|
|
Administrative expenses
|
55.0
|
40.8
|
|
Administrative expenses - Indian tax arbitration costs
|
-
|
13.1
|
|
Other expenses - corporate transactions
|
6.9
|
11.1
|
|
|
61.9
|
65.0
|
Included within current-year
corporate transactions are costs of $6.9m (2022: $11.1m) relating
to corporate transactions subsequently terminated.
|
4.3 Finance
Income
|
Year ended
31
December
2023
$m
|
Year
ended
31 December
2022
$m
|
|
Bank and other interest receivable
|
21.8
|
15.0
|
|
Other finance income
|
-
|
0.7
|
|
|
21.8
|
15.7
|
|
4.4 Finance
Costs
|
Year ended
31
December
2023
$m
|
Year
ended
31 December
2022
$m
|
|
Loan interest
|
15.0
|
13.2
|
|
Facility fees amortisation
|
0.9
|
0.9
|
|
Other interest and finance charges and unwind of discount
|
1.7
|
1.5
|
|
Exchange loss
|
7.7
|
2.6
|
|
|
25.3
|
18.2
|
Loan interest of $15.0m (2022:
$13.2m) was charged on the Egypt Junior and Senior Debt
Facilities.
4.5 Loss per Ordinary
Share
|
Basic and diluted loss per share are calculated using the following measures of loss:
|
Year
ended
31 December
|
Year ended
31 December
|
|
|
2023
$m
|
2022
(restated)
$m
|
|
Loss and
diluted loss
after taxation
from continuing
operations
|
(142.6)
|
(176.4)
|
|
Loss and
diluted loss
attributable to
equity holders
of
the Parent
|
(144.0)
|
(67.1)
|
|
The following reflects
the share
data used
in the
basic and
diluted earnings
per share
computations:
|
Number
|
Number
|
|
|
of
shares
|
of shares
|
|
|
2023
|
2022
|
|
|
'000
|
'000
|
|
Weighted average number of shares
|
196,128
|
364,470
|
|
Less weighted average shares held by ESOP and SIP Trusts
|
(2,777)
|
(7,313)
|
|
Basic and diluted weighted
average number of shares
|
193,351
|
357,157
|
Section 5 - Taxation
5.1 Tax Charge on
(Loss)/Profit for the Year
Analysis of tax charge on Loss for the year
|
|
Year ended
31
December
2023
$m
|
Year
ended
31
December 2022
(restated)
$m
|
|
Current tax charge:
Overseas corporation tax - Egypt
|
54.1
|
54.8
|
|
Overseas corporation tax - India
|
-
|
0.2
|
|
Total current
tax charge
on
loss from
continuing operations
|
54.1
|
55.0
|
|
Deferred tax credit:
Reversal of deferred tax credit on recognition of financial assets - UK
|
-
|
(0.1)
|
|
Deferred tax credit on intangible/tangible
assets -
Egypt
|
(12.3)
|
(36.6)
|
|
Deferred tax (credit)/charge
on non-current
assets -
Egypt -
adjustment
|
(1.4)
|
9.6
|
|
Deferred tax
credit from
continuing operations
|
(13.7)
|
(27.1)
|
|
Total tax
charge on
loss from
continuing operations
|
40.5
|
27.9
|
|
UK deferred tax (credit)/charge
|
(4.1)
|
4.1
|
|
Total deferred
tax (credit)/charge on
(loss)/profit from
discontinued operations
|
(4.1)
|
4.1
|
The current tax charge in Egypt of $54.1m (2022: $54.8m) is settled by EGPC on the Group's behalf.
Factors affecting
the tax
charge for
the year
A reconciliation of
the income
tax charge
applicable to
the (loss)/profit
before income
tax to
the UK
statutory rate
of income
tax is
as follows:
|
|
Year ended
31
December
2023
$m
|
Year
ended
31
December 2022
(restated)
$m
|
|
Loss before
tax from
continuing operations
|
(102.1)
|
(148.5)
|
|
Loss before tax multiplied by the UK statutory rate of corporation tax of 23.52% (2021: 19%)
|
(20.7)
|
(28.2)
|
|
Effect of:
Special tax rates and reliefs applying to oil and gas activities in the UK
|
(1.1)
|
(25.5)
|
|
Special tax rates and reliefs applying to oil and gas activities in Egypt
|
13.4
|
15.7
|
|
Impact on deferred tax of adjustments in respect of prior years
|
-
|
9.8
|
|
Temporary differences not recognised
|
23.5
|
43.7
|
|
Disposal of financial assets at fair value through profit or loss
|
-
|
0.2
|
|
Permanent items (non-taxable)/non-deductible
|
14.3
|
6.9
|
|
Group relief surrendered against profits/gains
arising in
discontinued operations
|
11.1
|
5.3
|
|
Total tax
charge on
(loss)/profit from
continuing operations
|
40.5
|
27.9
|
The reconciliation shown above has
been based on the average UK statutory rate of corporation tax for
2023 of 23.52% (2022: 19%). The Finance Act 2023 was enacted on 11
July 2023 and increased the UK main rate of corporation tax from
19% to 25% with effect from
1 April 2023.
The applicable UK statutory
corporation tax rate applying to North Sea oil and gas activities
is currently 40% (2022: 40%). A temporary Energy (Oil and Gas)
Profits Levy of 25% was legislated in July 2022, effective from 26
May 2022. A further increase to 35% from 1 January 2023 was
substantively enacted in November 2022.
The applicable statutory tax rate
applying to oil and gas activities in Egypt is currently 40.55%
(2022: 40.55%).
Section 5 - Taxation (continued)
5.2 Deferred Tax Assets and
Liabilities
Reconciliation of Movement in Deferred Tax
Assets/(Liabilities):
|
|
Temporary
difference in respect of non- current assets
(restated)
$m
|
Losses (restated)
$m
|
Other
temporary differences
$m
|
Total
(restated)
$m
|
|
Deferred tax
assets
|
|
|
|
|
|
At 1 January 2022
|
-
|
-
|
-
|
-
|
|
Deferred tax credit through the Income Statement - continuing operations
|
8.7
|
-
|
-
|
8.7
|
|
|
At 31 December 2022
|
8.7
|
-
|
-
|
8.7
|
|
|
Deferred tax charge through the Income Statement - continuing operations
|
(1.1)
|
-
|
-
|
(1.1)
|
|
|
At 31
December 2023
|
7.6
|
-
|
-
|
7.6
|
|
|
Deferred tax
liabilities
|
|
|
|
|
|
|
At 1 January 2022
|
(58.8)
|
16.2
|
(0.1)
|
(42.7)
|
|
|
Deferred tax (charge)/credit
through the
Income Statement
- continuing
operations
|
34.5
|
(16.2)
|
0.1
|
18.4
|
|
|
Deferred tax (charge)/credit
through the
Income Statement
- discontinued
operations
|
-
|
9.1
|
(13.2)
|
(28.4)
|
|
|
At 31 December 2022
|
(24.3)
|
9.1
|
(13.2)
|
(28.4)
|
|
|
Deferred tax credit through the Income Statement - continuing operations
|
14.8
|
-
|
-
|
14.8
|
|
|
Deferred tax (charge)/credit
through the
Income Statement
- discontinued
|
|
|
|
|
|
|
operations
|
-
|
(9.1)
|
13.2
|
4.1
|
|
|
At 31
December 2023
|
(9.6)
|
-
|
-
|
(9.6)
|
|
Deferred tax
assets analysed
by
country:
|
|
As at
31
December
2023
$m
|
As
at
31 December
2022
(restated)
$m
|
|
Egypt
|
7.6
|
8.7
|
|
|
7.6
|
8.7
|
Deferred tax
liabilities analysed
by
country:
|
|
As at
31
December
|
At
at
31
December
2022
|
|
|
2023
|
(restated)
|
|
|
$m
|
$m
|
|
Egypt
|
(9.6)
|
(24.1)
|
|
UK
|
-
|
(4.1)
|
|
|
(9.6)
|
(28.4)
|
Recognised deferred tax assets Egypt
Deferred tax assets of $7.6m (2022:
$8.7m) have been recognised in respect of Egypt oil and gas
non-current assets temporary differences of $18.7m (2022: $21.5m)
on two concessions as future profits are expected to be available
on those concessions to recover the value of the assets.
At the balance sheet date the Group
has $33.0m (2022: $24.7m) temporary differences in respect of Egypt
non-current assets and
$38.6m (2022: $27.4m) Egypt tax
losses, which can be offset against future oil and gas profits in
Egypt. No deferred tax asset has been recognised in respect of
these temporary differences as it is not considered probable that
these amounts will be utilised in future periods.
Deferred tax liabilities Egypt
Deferred tax liabilities of $9.6m
(2022: $28.4m) have been recognised across six concessions in
respect of taxable temporary differences of $39.7m (2022: $66.0m)
related to Egypt oil and gas non-current assets. No tax losses are
available to offset these taxable temporary differences.
Section 5 - Taxation (continued)
5.2 Deferred Tax Assets and
Liabilities (continued)
UK
In 2022, a deferred tax liability of
$4.1m was recognised in respect of earnout consideration due in
relation to the disposal of UK oil and gas producing assets.
Following settlement of the earnout in 2023 (see note 6.1) the
chargable gain arising has been fully sheltered by available tax
losses and no tax charge arises. The deferred tax liability has
therefore been reversed in full.
Unrecognised deferred tax assets
No deferred tax asset has been
recognised on the following as it is not considered probable that
it will be utilised in future periods:
|
|
At
31
December
2023
$m
|
At
31 December
2022
(restated)
$m
|
|
UK RFCT trading losses
|
244.6
|
278.0
|
|
UK SCT loss
|
253.1
|
274.1
|
|
UK other ring fence temporary differences
|
626.4
|
609.5
|
|
UK excess management
expenses
|
414.6
|
354.9
|
|
UK non-trade deficits
|
79.6
|
80.6
|
|
UK temporary differences
on share-based
payments
|
34.0
|
39.5
|
|
UK disallowed tax interest expenses
|
11.3
|
19.9
|
|
UK temporary difference
on financial
asset held
at fair
value
|
-
|
0.5
|
|
Egypt fixed asset temporary differences
|
20.9
|
24.7
|
|
Egypt ring fence corporation tax trading losses
|
29.7
|
27.4
|
|
Mexico tax losses and other temporary differences
|
251.3
|
196.5
|
Section 6 - Discontinued Operations
6.1 (Loss)/Profit from
Discontinued Operations
Settlement of earnout consideration due
On 2 November 2021, Capricorn completed the sale of its interests in the UK Catcher and Kraken producing assets to Waldorf Production Limited
("Waldorf").
Consideration under the agreement
included contingent consideration ('earnout consideration')
dependent on oil prices from 2021 to the end of 2025 and minimum production levels being achieved. The first annual payment of earnout consideration
of $75.8m
due on 2021 production was received in 2022. The second annual
payment of $134.4m due on 2022 production was settled in March
2023.
On 18 December 2023, Capricorn entered into a settlement agreement with Waldorf for the full and final settlement of the remaining earnout
consideration due. Under the agreement, Capricorn received
an initial
payment of
$48.0m in
December 2023,
with a
further
$2.0m to be received at the end of Q1 2024. An additional payment
of $22.5m
is due
in early
January 2025
and Capricorn
will also
receive Waldorf's 25% non-operated WI in the Columbus gas field, subject to the necessary approvals. As at 31 December 2023, the balance of
$7.0m has been recognised as a receivable for the Columbus asset.
At the date of the settlement agreement,
the fair
value of
the earnout
was $79.3m,
a fall
of $10.4m
across the
year, reflecting
oil price
movements. With combined proceeds
from the
settlement agreement of $77.6m, after adjusting for expected credit losses of $1.9m, the Group recorded a loss on the settlement of the earnout of
$1.7m.
|
A breakdown of the total profit from discontinued operations
is as
follows:
|
Year
ended 31 December
|
Year ended 31 December
|
|
|
2023
$m
|
2022
$m
|
|
Cost of
sales
|
|
|
|
Cost of sales - recovery of production costs
|
4.3
|
1.5
|
|
Operating profit
|
4.3
|
1.5
|
|
(Loss)/Gain on financial asset at fair value through profit or loss - earnout consideration
|
(10.4)
|
110.4
|
|
Loss on disposal of a financial asset
|
(1.7)
|
1.5
|
|
Finance income
|
2.3
|
-
|
|
(Loss)/Profit before
tax from
discontinued operations
|
(5.5)
|
113.4
|
|
Tax credit/(charge)
|
4.1
|
(4.1)
|
|
(Loss)/Profit after tax
from
discontinued operations
|
(1.4)
|
109.3
|
|
(Loss)/Earnings per share for (loss)/profit from discontinued
operations
|
2023
$
|
2022
$
|
|
(Loss)/Profit per ordinary share - basic and diluted ($)
|
(0.01)
|
0.31
|
An audit of the Kraken and Catcher
joint operations for the period from January 2019 to December 2020
resulted in a refund of production costs from the operator of $4.3m
and $1.5m, which has been credited to discontinued operations in
2023 and 2022 respectively.
The fair value loss in 2023 is
mainly due to lower oil prices in comparison to 2022 oil
prices.
Section 6 - Discontinued Operations
(continued)
6.2
Cash Flow Information for Discontinued Operations
|
|
Year ended
31
December
2023
$m
|
Year
ended
31 December
2022
$m
|
|
Net cash flows from/(used in) operating
activities
|
4.3
|
(9.6)
|
|
Net cash flows from investing activities
|
184.7
|
77.2
|
|
Net increase in cash and cash equivalents
|
189.0
|
67.6
|
2022 earnout of $134.4m and interest payment of $2.3m received in March 2023. In December 2023, a further settlement
of $48.0m was
received following the revised terms of the earnout with Waldorf (see note 6.1). 2021 earnout of $75.7m and interest of $1.5m payment received in June 2022.
6.3 Discontinued
Operations - Senegal Contingent Asset
In December 2020, Capricorn disposed
of its
entire 40%
working interest
in its
Senegal exploration and development assets.
Further deferred consideration of
up to $50.0m is due, dependent on the timing of first oil
production from the assets and on the average Brent oil price during the first six months of production. Assuming
average Brent
oil prices
remain above
$60/bbl during
the first six
months of
production, Capricorn will receive $50.0m if first oil production is achieved by June 2024. No payment is due if first oil production occurs
after this time.
In accordance with IFRS 15, no amount is recognised at the balance sheet date as there is no reasonable certainty that any revenue recorded would not reverse in future periods.
6.4 Discontinued Operations -
Senegal Contingent Liability
On 14 November 2023, Capricorn received notification
that Woodside
Energy ("Woodside") had received a notice from the Senegalese Tax
Authority. The
notice from
the Senegalese
Tax Authority
states that:
‒ Senegalese registration
duty ($29.0m
including interest and penalties) should
have been
paid on
the transfer
(in December
2020) by
Capricorn to Woodside of its PSC interests
offshore Senegal; and
‒ Senegalese real estate capital gains tax ($14.5m including
interest and
penalties) should
have been
withheld by
Woodside from
the price paid to
Capricorn in respect of the sale of those PSC interests.
Under the terms of the sale agreement between Capricorn
and Woodside,
Capricorn is
responsible for
any registration
duty and
for any
capital gains tax arising in connection with the
sale of the PSC interests.
Capricorn's analysis remains that no Senegalese registration
duty or
capital gains
tax is
payable, based
on analysis
at the
time of
the transaction. Capricorn will continue to vigorously defend
its position
on this
matter, including
exercising rights
under the
sale agreement
to participate in the defence of any such
claim.
Glossary
bbl - Barrel of oil
BED - Badr El Din
concession
boe - Barrels of oil
equivalent
boepd - Barrels of oil equivalent
per day
bopd - Barrels of oil per
day
EI - Net entitlement
interest
GAAP - Generally accepted
accounting principles
G&A - General and
administrative expenses
m - Million
mmboed - Millions of barrels of
oil equivalent
mmscf - Million standard cubic
feet
$ - US dollar
WI - Working Interest