Member Info for LOTM-13

So where is the current break-even point for Capricorn if we leave nat gas production to make that tiny profit per day ?

OPEX is $13.00 per barrel.

The extra deferred consideration payment to Shell of $25M that will need to be paid in Q1 2024 for the Egypt assets.

So you can say its just over $2M per month, or on a per barrel basis its $11.41 ($25M / 2.19M) assuming production for the year averages the 6,000 bopd they projected.

Please note production is very much biased to the 2nd half of the year so if you split the $25M in 2 & assign $12.5M to each half of the year & then divide that by the production for that half year my estimate is that the cost was around $13.80 in the 1st half.

G&A cost next

Total is expected to be around $70M for 2023 falling to just $35M next year (which is something people really need to grasp going forward).

Again you can either assign it per month $5.83M or by a barrel $31.96 (ouch) & again if you want to weight it to the production profile it was probably around $38.80 in the 1st half of the year.

Just as an aside looking ahead if we were to say production was 6,000 bopd in Jan 2024 (the average expected for 2023) then the G&A cost for that month works out at just $15.68 per barrel & if its 7,000 which is where I expect it to be if not higher then the figure falls to $13.45 per barrel.

So for the 1st half of 2023 we're looking at costs of $13.00 + $13.80 + $38.80 = $65.60 per barrel.

For the year as a whole $13.00 + $11.41 + $31.96 = $56.37 per barrel

For the 2nd half of 2023 approximately $13.00 + $9.70 + $27.13 = $49.83 per barrel

As you can clearly see there isn't a lot of profit margin between $77.75 (the average price of our Egypt oil in the 1st half of 2023) & our costs of $65.60 per barrel.

And that's before you write of the cost of the Mexico well $30M (which wipes out another $13.50+) or take account of the $120M of drilling in Egypt for 2023.

LOTM

I wasn't intending to buy any more shares, especially ahead of the half year results & webcast on Thursday.

However given the silly price they were just offering I just bought another 6,750 shares at 158.98p

Maybe someone isn't watching the price of oil & the direction its being going for the past 6 weeks!

$$$$$$$ in the bank daily

LOTM

Well so far in Sept the price of Brent oil has averaged roughly $90 a barrel which means the company is receiving roughly $88 a barrel in Egypt.

We should be producing a net amount north of 5,500 bopd by this stage, possibly getting close to 6,000 net bopd. However I'll use the lower number for now.

So revenue earned over the last 10 days is $4.84M (10*88*5500) less OPEX of $0.715M

(10 x $6 per barrel to be safe x 2.1685 (the ratio of our share of production compared to the WI costs that we need to cover).

Therefore we've made over $4M in those 10 days with only really G&A costs to come of that figure in cash term & an allowance for Amort & Depreciation of the asset from "finding" it cost.

In oil terms our true OPEX costs are around $13 per barrel & we are currently making around $400,000 a day net.

The Nat Gas terms seem to be slightly different as the cost ratio works out at 2.6992 (call it 2.7) on the figures the company presentations give.

So on production of 7300 boepd we're getting revenue of around $118,500 a day (5.6*$2.90*7300) with OPEX costs of $108,405 ($5.5*7300*2.7). A mere $10,000 a day profit unless the price of gas is index linked to inflation since last year.

Certainly not worth the effort in monetary terms that's for sure, but they do get some liquids production with the gas & some gas will be used for power production etc.

That explains precisely why they are targeting liquids production.

LOTM

HarrierResearch,

So I've basically got the 2nd half of this year kind of neutral, with that $140M of expenditure matched with around the same sort of level of cash inflow from Egypt.

Now some might think that's not a great outcome, but there failing to see the turnaround that will occur in 2024. When that $340M of expenditure is immediately cut by $90M ($35M from G&A, $30M non Egypt exploration & $25M share buy-back).

On top of that your production levels are much higher than they are now, so I'd expect next years exploration, development & production expenditure to be lower, maybe in the $80-100M range. So that would be another $20 - 40M to take off this years expenditure number. While at the same time revenue from Egypt is far higher, especially in the 1st half of 2024 than it was this year. Plus we'll be getting a healthy payment from Waldorf as well.

LOTM

Hi HarrierResearch,

Lets see, $25M to Shell for the max earn-out on the Egypt assets, $13M for the share buy-back, $40M G&A expenses, given that they will likely have to front load some of the severance payoffs to staff, $30M for the Mexico well, $60M for D&P drilling in Egypt ( half the expected amount for the year there) & finally $35M in OPEX costs.

I've got the 2nd half at $140M (assuming they spend the other $12M+ on the share buy-back during that period) which doesn't include the next special payment to shareholders.

LOTM

I've been crunching some numbers ahead of the half year report.

There estimate for 2023 production in Egypt is for an average of 6,000 bopd & 7,021 boe in nat gas.

The 2022 actual numbers were 5,028 bopd & 7,941 boe in nat gas.

Given production was on a decline throughout 2022, that decline would have continued probably until the start of the 2nd quarter when the 1st of the new development wells would probably have come online, which would have stabilised the rate before it started to increase as more & more wells are added in.

Therefore I don't think oil production will have averaged above 4,750 bopd during the 1st half of the year. Or around 860,000 BO in total.

Average price of Brent for the 1st half was $79.75 & therefore the realised price in Egypt is thus around $77.75

So gross oil revenue for the 1st half should be around $66.5M with an additional $12M from nat gas.

I've estimated total outgoings to be a hefty sum of around $203M for the 1st half plus the $449M that was paid as a special dividend to shareholders.

So we should be looking at a net cash balance of around $157M assuming receivables due $97M & overdue amounts of $66M are roughly unchanged from the end of December.

I am being conservative in the above numbers so hopefully the actual results top these numbers.

Right now we should be entering a fantastic scenario where rising production and increasing oil prices are really increasing daily revenue substantially.

Oil revenue in the 1st half was around $360,000 gross per day on average. Today its probably around $460,000 & if the price of oil remained constant it would be north of $560,000 in late December (possibly close to $600,000 even).

All of which makes a massive difference to the bottom line.

LOTM

Share Register has now been updated on the company website to the positions as of 25th August 2023.

We knew about the drop in the Madison holding through an earlier "holdings announcement".

What we didn't know is that Irenic Capital reduced its holding between 11th & 25th August by 912,716 shares.

The other noticeable change is that ABRDN no longer hold above 3% of the company, they previous held 4,543,990 shares (3.18%) we have no way of knowing whether they sold all of it or part of it.

BoA (Merrill Lynch) appear on the list now but only for 5,118,047 shares which is a far cry from there current voting right holding of over 15M shares.

Goldman Sach's holding was just 11.9M shares at that time compared to 17.5M currently.

LOTM

Now Bank of America (Merrill Lynch) has revealed that it to has added 0.6M to its last declared voting position.

So Goldman Sach's is no1 for voting rights & BoA no2.

We still don't know who's reduced there holdings for everything to match up, but clearly something is going on when 2 of the biggest Investment banks in the world are aggressively increasing there positions here.

LOTM

Bought another 1500 at 169.958p but its not showing up on the LSE, that's the last 3 trades I've done Barclay's must have done them through another vendor.

Anyway I'm expecting some interesting movements this afternoon now that the USA is back from Labour Day.

LOTM

So it was Goldman Sach's who were the big buyers on 31st August increasing there holding by another 2.605M

I'm sure there will be other holding notices due to be released soon as that stock has to have come from somewhere else.

If it wasn't from any of the existing top 11 shareholders then there holding of CNE has just increased from 109.638M shares or 76.8% to 112.243M or 78.6%

Which means the free float is down to just 30.6M shares.

Hopefully the company website will be updated soon with a list of the major shareholders as at 31/08/23 rather than 11/08/23

Goldman Sach's clearly see value here.

LOTM

From EnQuest's announcement from 05/09/23 relating to the half year to 30/06/23

Kraken

Average production of 13,082 Boepd (18,556 Boepd gross) (2022: 19,527 Boepd net; 27,698 Boepd gross) reflected an efficient return to service of the FPSO following the anomalous failure of hydraulic submersible pump ('HSP') transformer units during May. Working alongside the vessel owner, Bumi Armada, the EnQuest asset team limited the impact on production, resuming production on a single train basis on 12 June and then reaching 80-90% production capacity through the refurbishment and reinstatement of a transformer unit in July. On 7 August, a further transformer unit was brought back into service, following a rebuild, returning Kraken to full production. New transformer units were proactively ordered from the manufacturer and are due for delivery in September, providing further resilience to production capacity.

The Group reacted quickly to mitigate production losses by executing maintenance work, originally planned for the third quarter shutdown during two periods of single train operations. No further planned maintenance outages are anticipated during 2023.

In light of the direct impact of the EPL on the Group's available cash flow and the indirect contribution to underlying inflationary pressures through incentivisation of industry-wide investment within a defined timeline, the Group took the decision to delay its plans to progress the Kraken drilling programme. However, near-field drilling and subsea tie-back opportunities continue to be assessed, with interpretation of 3D seismic data ongoing to access the significant opportunity in terms of main field side-track drilling opportunities, along with further drilling within the Pembroke and Maureen sands, with c.33 Mmboe of 2C resources available at Kraken. Until drilling resumes, Kraken production will be subject to natural field decline.

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

So most of the down time was when oil prices were at there low point of the year & full production has been restored going into rising oil prices.

LOTM

Continuing ......

From the Capricorn 2022 annual report published 27th April 2023

additional contingent consideration ('earnout consideration') dependent on oil prices from 2021 to the end of 2025 and minimum production levels being achieved, which at 2 November 2021 had a fair value of US$197.4m including an adjustment for expected credit losses.

The fair value of the earnout consideration fell by US$8.1m from 2 November 2021 to US$189.3m at 31 December 2021. The first annual payment of earnout consideration of US$75.8m due on 2021 production was received in 2022. With strong oil prices and production levels above forecast across the assets, the fair value of the remaining earnout consideration receivable increased by US$110.4m during 2022 to a closing fair value receivable of US$224.1m in the Balance Sheet as at 31 December 2022 (see note 3.5).

From Waldorf Production UK PLC (2022 Annual Report) published 1st June 2023

in the notes page 50

As part of the purchase of the producing assets of the subsidiary, Waldorf Real Estate Limited (formerly Capricorn North Sea Limited), the Company is due to pay additional payments to Capricorn Energy plc, based on the results of the fields. At the end of December 2022, this is estimated to be $134.4m relating to 2022, which is due to be settled in March 2023. There is an additional $101.0m which will be due from 2024 - 2026. During the year, the contingent consideration was revalued upwards by $91.2m mainly due to an increase in forward oil prices and a net increase in the total Catcher and Kraken reserves.

LOTM

I spent some time over the weekend, going through old announcements regarding the sale of the UK assets to Waldorf in 2021 & the future payments that Capricorn might get, especially with the current outlook for the oil price.

From Enquest announcement 24th May 2023

We have improved asset reliability and integrity across our operated assets, resulting in delivery of strong uptime across our portfolio, including production efficiency of c.89% at Magnus, c.94% at the Greater Kittiwake Area and at Kraken, where we continue to deliver top quartile FPSO performance.

Guidance unchanged

2023 average net Group production is expected to be between 42,000 Boepd and 46,000 Boepd, noting shutdowns and periods of single train operations planned at Magnus and Kraken, respectively, in the third quarter

Production details

Average daily production on a net working interest basis (Boepd)

1 Jan 2023 to 30 Apr 2023 1 Jan 2022 to 30 Apr 2022

UK Upstream

- Kraken 15,910 19,862 boepd

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

So Kraken is due some downtime for maintenance during this quarter (3rd quarter 2023) hopefully more detail will be revealed with Enquest's half year report.

Based on the Enquest data, Waldorf's share of production for the 1st 4 months of 2023 for Kraken would be 6,657 boepd compared to 8,311 in 2022.

So total production for the 4 months - (120 days) was 798,885 out of the 3.002M needed to trigger the additional payments.

Putting Kraken on course to produce roughly 2.4M for the year before the loss for maintenance is included.

Getting current info on the Catcher area is sadly much harder. Production for 2022 seems to have averaged around 38,000 boepd according to the Harbour Energy website. 2 new wells were completed just before the end of 2022 so they should help to keep production levels up during the rest of this agreement period.

If we were to say field production during 2023 was to average 34,000 boepd allowing for declines etc, then Waldorf's 20% interest from Capricorn works out at 6,800 boepd (they acquired MOL's 20% interest in 2022 separately as well).

So 6,800 boepd would indicate production of over 2.4M barrels for 2023 from the Catcher area affects us.

Add the 2 together & we're looking at total production of 4.8M barrels.

Indicating that production will be roughly 1.8M barrels above the 2023 performance threshold of 3.002M To which Capricorn will therefore be entitled to 40% ie 0.72M barrels.

If I do a rough calculation for a comparison, 2022 total production was 5.82M less the 3.94M threshold gave an outperformance of 1.876M to which we were entitled to 50% at that point ie 0.938M barrels & that yielded a payment from Waldorf of $134.4M. The 2021 payment was $77M.

Average price of Brent oil in 2021 was $71, in 2022 it was $101 & so far it has averaged $80.12 in 2023 (hopefully that average is going to get pulled even higher during the next 4 months to possibly north of $83 per barre

Just bought 8,000 at 173.4108p trade not showing up yet.

Decided not to hold of any longer given the oil price is now at a 41 week high & I don't want to be on the wrong side if things pan out like they did yesterday from this time onwards. So banked a nice profit on yesterday's sell & got another 100 shares as well. Put another sell order in place.

I see a trade of 3.88M has just gone through !

LOTM

My goodness 5.185M traded in the auction at 172p - certainly never saw that coming, or the other significant numbers now going through around the 172p level.

Will need to be on the ball in the morning now to see what price it opens at and which direction it is headed. Will need to look out for holding announcements in the coming days now to see where the stock came from & went to.

LOTM

I have sold 7,900 at 181.7307p but the order is not showing up yet. (done at 15:37)

MM's seem short of stock today, Expecting a bit of a tree shake tomorrow to try & flush out some stock, so I'll be ready to try & take advantage of it if I can.

LOTM

EdwardSeaton,

I'm not sure its hilarious, but yes it could do that in theory, but what about the near £8M of debt it has & the near net £4M of trade payables (after deducting the trade receivables) ?

The property portfolio should be sold off immediately, except for the potential development one where they nee to finally make a decision to seel it to someone else or go ahead & build it. The property portfolio is not increasing in value & all they do is pay £200,000 a year to a company controlled by the other son to manage it for them.

Payoff the debt with it, thus cutting out the £450,000 in interest payments in just the last 6 months.

No-one knows what these listed investments are or how liquid they are to get out of.

As for the coal operation, it would seem that all of these issues last year & this year are no-ones fault, because no-one seems to be accountable for the failings.

The staff got massive pay rises last year not because of there good performance workwise but simply because the coal price rose so much.

LOTM

Here's another thought.........

I'm not sure who is lending (selling there voting rights to both Goldman Sachs & Bank of America) but given the numbers involved its certainly more than 1 party that's doing so and if your not going to be using the voting rights for a purpose then when pay for the right to do so ?

LOTM

Very Interesting, Bank of America increased there holding yesterday (when the LSE market was closed).

I have been closely watching all of these holding announcements & also the large shareholder data on the company website.

On 31st July there were 10 holding above 3% listed for a total of 94.826M shares or 66.21% of the company.

By the 11th August (latest data on the company website) that had increased to 94.905M or 66.43% (Newtyn had disposed of 1.13M shares during that time & ABRDN disposed of just over 70K. Blackrock & Vanguard had both increased there's by tiny amounts (under 10K). Goldman Sacks had increased by 1.267M

Since then the holdings announcements tell us, Madison has disposed of 2.635M shares, Goldman Sachs has increased its holding by a further 3.046M shares & Bank of America (Merrill Lynch) has acquired voting rights over 14.321M shares.

Which means the 11 largest holdings now account for 76.8% of the company's shares.

There is clearly something going on & they are doing there damdest to shake weak holders into parting with there shares so that they can accumulate them on the cheap.

LOTM

Mr.kioto,

The half year report is due 14th Sept.

Sadly there is no cost savings going to show up in the numbers this year. The $35M is being saved from 2024 onwards, in the meantime the money that would have been spent mainly on salaries of managers etc is required to pay there severance pay instead (160 UK staff down to 40) etc.

They should also be giving us an update on how all the development & exploration drilling in Egypt has gone so far this year, along with revised production forecasts for the rest of 2023 as some of those new wells come online. Hopefully they are on target to raise production by at least the 10% they were looking for, given the fact the early new well results were ahead of the pre-drill expectations.

We should also get to see how far behind we are in receiving the revenue from Egypt, that needs to stabilise or reduce from before.

They should also be in a better position to give guidance on when the $100M is going to be paid out etc.

The share price is being controlled by the institutions at the moment, there is clearly something going on with these constant changes in holding notices, which is highly unusual in itself. Its just that we don't know what it is !

There is a capital markets day planned for Q4, so that may be the catalyst that helps the share price.

LOTM