Capricorn Energy has set out plans to return substantially all of its cash to shareholders, while slimming down its focus to Egypt.
As part of this plan, it will sell down its UK interests in the Catcher and Kraken assets.
Randy Neely, former CEO of TransGlobe Energy, will also come in as CEO of Capricorn as of June this year.
Capricorn chair Craig van der Laan explained that the new board had arrived in February with a mandate for change. Following a strategic review, he said, the results are in.
The most significant step will be a special dividend of $575 million. The first tranche will come in May, with a return of around $450mn. A second payment of $100mn will come in the fourth quarter. Capricorn also plans to buy back at least $25mn of shares over the next 12 months.
Van der Laan said the plan includes “five areas of decisive strategic action. These include a decision to make a material return of capital to shareholders; a significant cost reduction as part of a broader plan to preserve shareholder cash; the curtailment of expensive exploration activities outside of near field activity in Egypt; plans to improve the Egypt business; and a drive for a culture change across the company.”
While van der Laan said more information would be coming on the medium to long-term plans, the short-term intent is to return all “excess capital to our shareholders”.
The special dividend of $100mn is contingent on various factors, such as reducing the debts owed to the company in Egypt and a renegotiation of the licence.
At the end of the year, Capricorn had net cash of $597mn. The trade receivables in Egypt was $97mn. Capital expenditure in 2022 was $162mn. Capex this year will be around $155-175mn.
In the UK, Capricorn has already begun the process to sell down its assets. The company said its earnout for 2022 on Catcher and Kraken was $137mn, which it received in the first quarter of this year.
Capricorn will set out its longer-term plans at a capital markets day in the fourth quarter of the year.