6th Sep 2022 09:43
(Alliance News) - Capricorn Energy PLC on Tuesday said it is considering alternatives to its previously announced merger with Tullow Oil PLC, as it posted a narrowed loss in the first half of 2022.
The Edinburgh-based oil and gas company explained it continues to progress its merger with peer Tullow Oil, but it also is "exploring a number of expressions of interest relating to alternative transactions". The plan to merge was first announced in June.
Capricorn plans to issue a documentation on the proposed merger in the fourth quarter of 2022 before a shareholder meeting.
"The board continues to believe that the proposed merger with Tullow can deliver significant long-term value for shareholders through creating a leading, Africa-focused energy company. The board is also mindful of the impact of external factors and market conditions and is, as always, assessing all options to maximise value for shareholders.
"The company is exploring a number of expressions of interest relating to alternative transactions, and is engaging with those parties expressing interest to evaluate potential outcomes," Capricorn Chief Executive Simon Thomson said.
Capricorn said its pretax loss narrowed to USD48.7 million in the six months that ended June 30 from a USD87.4 million loss a year prior, boosted by its recent Egyptian acquisition and rising oil prices.
Revenue jumped to USD137.4 million from just USD500,000 a year before, prior to the acquisition. Production topped 35,500 barrels of oil equivalent per day from the Egyptian asset, compared to 36,459 in 2021, net working interest share. However, Capricorn lowered its production guidance to 33,000 to 36,000 barrels of oil equivalent per day from previously 37,000 to 43,000.
Capricorn noted it sold oil for an average of USD110.9 per barrel of oil equivalent in the first half of 2022, up 43% from the average price of USD77.8 for the period from September 24 to December 31, 2021.
Unsuccessful exploration costs rose to USD28.7 million from USD14.9 million and administrative & other expenses widened to USD33.5 million from USD24.6 million. Further, Capricorn booked one-off USD24.5 million impairment on exploration assets.
"Almost one year since the acquisition of the Egypt business, we continue to make good progress and have been successful in prioritising oil and liquids production growth while current commodity prices remain high," said CEO Thomson, noting Capricorn - formerly known as Cairn Energy - returned more than USD500 million to shareholders following the receipt of a long-awaited tax refund in India.
Capricorn shares were 2.6% higher at 240.40 pence each in London on Tuesday morning. Tullow shares were down 2.3% at 49.73p.
By Tom Budszus; [email protected]
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