Updated Cavendish Note - Stonking 519p TP27 Mar 2026 11:47
"Strengthening momentum ahead of concession catalyst Capricorn enters 2026 with improving operational momentum, a strengthened balance sheet and a clear path toward enhanced value creation driven by the anticipated ratification of the merged concession agreement in Egypt (expected 2Q26).
In 2025, the Company delivered robust production (20,024boepd), strong cash collections (US$217m), and material deleveraging (net cash of US$103m). Stabilised production guidance (18,000-20,000boepd), strong cash flow from the Company’s Egyptian assets and optional M&A catalysts for 2026 all support a constructive outlook for Capricorn.
We update our forecasts and our target price to 519p, a 96% premium to the current levels.
— Geared to higher oil prices: For FY26, 43% of Capricorn’s production is expected to be liquids, providing Capricorn with significant exposure to the recent spike in energy prices caused by the conflict in the Middle East. Inputting the current strip price (2026: US$86/bbl, 2027: US$78/bbl), we forecast FY26 revenues increasing by c28% from pre-conflict levels, leading to an EBITDA increase of c55%. Using DCF analysis, we calculate an updated Core NAV of 519.1p (+18% pre-conflict), which we use as the basis for our updated target price of 519p – a 96% premium from current levels.
— Production momentum: FY25 working interest production averaged 20,024boepd, above the midpoint of FY25 guidance (17,000-21,000boepd), with YE25 production increasing to 21,003boepd, reflecting strong new well performance and improved waterflood response at Bade El Din. Improving cash conversion in Egypt: Cash collections in FY25 totalled US$217m, reducing Capricorn’s YE25 receivables balance to US$86m, the lowest level since 2022. Group net cash at YE25 was US$103m, comprising US$133m in cash and US$30m in debt, which is scheduled to be repaid over the next three years. We note the announcement by the Minister of Petroleum in Egypt that all outstanding payments to oil and gas investment partners will be settled by the end of June 2026. Capricorn’s receivables balance at YE25 was US$81m (before expected credit loss adjustments).
— Value accretive M&A: Capricorn continues to evaluate value-accretive M&A, including the UK North Sea (where it can leverage its legacy tax loss position), Egypt and the general MENA region. The objective remains to diversify and expand the portfolio to enhance the longevity of the business and deliver consistent shareholder returns.
— Potential all-cash acquisition: Capricorn has confirmed the receipt of multiple unsolicited, non-binding proposals from Alamadiyaf al-Masiyyah for Trading LLC for a possible all-cash acquisition. The Board has evaluated these proposals with advisors and granted due diligence access, though discussions are ongoing and clarity on funding arrangements is being sought. An offer period has commenced, and Alamadiyaf al-Masiyyah must announce a firm intention to offer or withdraw by April 8,
Sign In
Follow the stocks
