Full Year Results Announcement

27 March 2025

CAPRICORN ENERGY PLC ("Capricorn" or "the Company")

Full Year Results Announcement for the year ended 31 December 2024

Randy Neely, Chief Executive, Capricorn Energy PLC said:

"2024 was a pivotal year for Capricorn during which we continued to improve the operational performance of the Egyptian business and continued our culture of financial discipline, which helped the Company achieve the upper end of production guidance.

A key milestone in unlocking further value in our asset base will be achieved through the amendment to the terms of our concession agreements. In Q3 2024, together with our operating partner Cheiron Oil and Gas Limited ("Cheiron"), Capricorn proposed an amendment to consolidate the eight existing Egyptian concession agreements where we have an equal working interest into a new, single integrated concession agreement. Negotiations have gained real momentum since the Egyptian General Petroleum Corporation ("EGPC") formally convened an investment committee in September 2024 to assess the proposal, with the process expected to complete in 2025. A new concession agreement would include the commercial terms and additional investment that would support increased production and reserves, through enhanced activity levels, and strengthened returns, to the benefit of all parties.

We were pleased to report that the Company received $50m in January 2025 related to our disposal of the Sangomar asset to Woodside Energy ("Woodside"). Capricorn's stated desire to return the $50m payment has been impacted by the requirement to retain cash for any future tax obligations in Senegal related to the divestment, along with Waldorf Production UK's ("Waldorf's") failure to pay Capricorn $22.5m when due in January 2025.

Growth and diversification of operations and cash flows will be a key focus for 2025. Our goal is to ultimately deliver consistent shareholder returns and we are evaluating M&A opportunities in the UK North Sea and MENA region, through a strict set of financial and strategic criteria, to facilitate this. With a solid foundation being established in Egypt, we are well positioned for positive developments this year."

FY 2024 Operational and financial highlights

Ø Development drilling in Egypt concentrated on a liquids focused strategy

Ø Revenues of $147m; with an average oil price of $79.3/boe and gas price of $2.9/mscf

Ø Production costs of $42m, equivalent to $4.8/boe on a WI basis

Ø $63m capex on Egypt producing assets

Ø Group net cash of $23m; comprising $123m cash and $100m debt

Ø WI Egypt oil and gas production of 23,763 boepd at the upper end of guidance of 20,000 - 24,000 boepd, comprising 44% liquids; net entitlement sales volumes 9,737 boepd

Ø Net cash inflows of $66m from Egypt operations post-capex, including $135m cash receipts

Ø Egyptian receivables position of $184m with $9m expected credit loss adjustments

Ø Gross G&A of $24m*

Ø $57m cash returned to shareholders via a $50m special dividend paid in June 2024 and $7m share buyback completed in November 2024

Ø Profit of $11m; loss from continuing operations of $12m, profit from discontinued operations of $23m

* Before depreciation and share-based payment charges including $2m legacy costs

2025 Outlook

Ø Post year end $50m Senegal contingent payment received from Woodside in January 2025

Ø Production in 2025 is guided in the range of 17-21,000 boepd, 39% of which is forecast to be liquids

Ø Capex guidance of $85m - $95m

Ø In 2025 operating costs are forecast to be $5-7/boe

Ø Completion of a new concession agreement, consolidating the eight existing concession agreements where we have an equal share with Cheiron into a single, integrated agreement in preparation for final approval by the Egyptian competent authorities. The Alam El Shawish West (AESW) joint venture (20% WI) is also expected to commence negotiations to improve the concession agreement terms in 2025

Ø Development drilling will continue to focus on the delineation and development of the Abu Roash G (ARG) reservoir in Badr El Din (BED) and the continuing implementation of waterflood. In Q1 2025 two wells will be drilled on the AESW concession, targeting the ARG reservoir

Ø Exploration drilling in Egypt commenced in February 2025 with the spudding of WEF-1X, the first of up to six wells, fulfilling outstanding commitments on the South East Horus (SEH), West El Fayoum (WEF) and North Um Baraka (NUMB) concessions.

Ø M&A opportunities in the UK North Sea and MENA region continue to be evaluated in line with our strict set of strategic, financial and returns criteria to diversify and expand our operations

Ø The Company will continue to pursue the recovery of Waldorf's missed payment of $22.5m and the additional $7m should the Columbus acquisition expire on the long stop date (31 March 2025)

Ø Post year end $25m Shell contingent payment paid

Ø Post year end appointed Canaccord Genuity Limited as joint corporate broker

Enquiries to:

Presentation

The results presentation slides will be available on the website from 09:00 GMT.

Analyst conference call

You can listen to the results presentation by dialling in to a conference call 5-10 minutes prior to 09:00 GMT 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 the operator.

Webcast

A live webcast of the presentation including Q&A will be held today at 09:00 GMT for investors and analysts and will be available via our website at www.capricornenergy.com or on https://brrmedia.news/CNE_FY_24. This will be available for playback after the event.

Corporate overview

2024 was an important year for Capricorn. Following the strategic reset of the business in 2023 to become the cash flow-focused energy producer that we are today, we have made significant progress on delivering our business plan to unlock further value from our assets.

Operational review

Highlights for the year include regular and meaningful cash collections in the first half which, combined with a commitment to a more favourable fiscal environment in Egypt and improved operational alignment with our JV partner, enabled the resumption of investment in June 2024 with a full year total net capex spend of $63m. This included various infrastructure projects and the drilling of 11 development wells, focused on the ARG reservoir in the BED area. 

Capricorn and its operating partner, Cheiron, continued to make good progress with the amendment to the terms of its concession agreements with EGPC, with the process expected to complete this year. All Parties have committed to conclude, as soon as possible, negotiations to consolidate the eight existing Egyptian concession agreements in which Capricorn and Cheiron each have a 50% working interest (WI) into a single, new integrated concession agreement, in preparation for final approval by the Egyptian competent authorities. A new integrated concession agreement would include the commercial terms and additional investment that would support increased production, through enhanced activity levels, and strengthened returns.

Full year production was 23,763 boepd (44% liquids), generating revenues of $147m at an average realised oil price of $79.3/bbl and gas price of $2.9/mscf. Our average total production costs were $4.8/boe. Net cash generated from Egypt oil and gas production was $106m, with overall Group net cash of $23m, comprising $123m cash and $100m debt.

Reserves

Capricorn engaged GLJ Ltd. (GLJ) to undertake an independent oil and gas reserves evaluation on the Company's Egypt assets, to document the 2024 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 2023, 2024 production reduced net entitlement interest reserves by 3.6 mmboe

· Developed reserves additions in 2024 replaced 24% of production with 98% of this addition occurring in the BED area

· 54% of the 2P reserves are categorised as undeveloped

· The net present value (NPV) of future net entitlement revenues, discounted at 15% (NPV15) for the 2P basis is $169m.

Upon ratification of the new terms associated with the consolidation of the eight development concessions held equally with Cheiron, Capricorn intends to publish an updated competent persons report to describe the improved impact on the reserves position of these new terms and licence extension. A similar process of concession agreement renegotiation has begun on the nearby AESW block where the Company has a 20% working interest.

Production

WI production in 2024 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 23,763 boepd (44% liquids) for the year, at the upper end of the guidance range for WI production of 20,000 - 24,000 boepd.

Over the year Capricorn focused on improving knowledge of and optimising the producing assets in Egypt with the goal of establishing a better understanding of resource potential and correspondingly forecasting of future production. Working with our operating partner Cheiron, the Company prioritised liquids focused operations in the BED area and efforts continue to actively manage reservoirs with water injection, to add production and reserves. Cash receipts totalled $135m during the year across all concessions.

Development drilling activity is planned to continue in 2025 with a continuation of the strategy that has been taken at BED. In addition, wells will be drilled on the AESW concession, targeting the ARG reservoir. Workovers are an important, cost-efficient mechanism to maintain production and Capricorn will continue to proactively high-grade opportunities, supporting the Operator in prioritising economic projects. Capricorn anticipates that the consolidation of the eight development concessions shared equally with Cheiron will provide a catalyst for increased development activity and work is progressing with the Operator to ensure operational readiness and a comprehensive understanding of the opportunities across the portfolio.

Exploration

Exploration drilling resumed in Q1 2025 with a work programme to fulfil the outstanding commitments on the WEF, SEH and NUMB concessions. The Operator is planning up to six exploration wells in total. The first of these commenced in February with the WEF-1X well. In addition to targeting several conventional objectives the well will also test the emerging Abu Roash unconventional play.

Senegal tax assessment

In November 2023 Capricorn received notice under the sales agreement from the purchaser that it has received an assessment from the Senegal tax authorities relating to operations in Senegal, with two assessments raised that would impact Capricorn. The Company believes that neither claim is valid and is working with the purchaser to defend the Group's position. The purchaser has filed an action with the High Court of Dakar disputing the tax assessment from the Senegalese tax authorities. The purchaser is also preserving its rights under its Host Government Agreement and international treaties in relation to this matter. No provision has been made in the financial statements at the balance sheet date.

UK North Sea contingent payment

Capricorn continues to evaluate options to recover the defaulted final settlement payment of $22.5m payable by Waldorf on 3 January 2025 (which increases to $29.5m should the Columbus acquisition not complete by end Q1 2025). The Company is currently in discussions with Waldorf in the context of the Restructuring Plan proposed by Waldorf.

Outlook

Capricorn continues to work with its partner Cheiron to progress the negotiated terms of an improved concession agreement on those concessions where we have an equal working interest and expect this process to complete in 2025. The AESW joint venture (Capricorn 20% WI) will be pursuing improved concession agreement terms in 2025.

We are continuing to evaluate M&A opportunities in the UK North Sea and MENA region to diversify and expand our operations.

The Company will continue to prioritise shareholder returns where possible. Our stated desire to return the net proceeds received from Woodside to shareholders has been negatively impacted by Waldorf's default in January 2025 as well as the ongoing tax dispute in Senegal.

Principal risks and uncertainties

Managing the Group's key risks, and associated opportunities is essential to Capricorn's long-term success and sustainability. The Group endeavours to deploy capital in such a way that offers an appropriate level of return whilst ensuring the levels of associated political, commercial, and technical risk remain within the defined risk appetite of the Group.

The Group'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 are set annually to determine the level of risk the Group is willing to accept in the pursuit of these objectives and form a fundamental component of the Group'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, as well as progress against key risk projects, are reviewed at each Board meeting, and at least once a year the Board undertakes a dedicated risk workshop to review the Group's principal risks. This integrated approach to risk management has been and continues to be critical to the delivery of our strategic objectives.

Responding to Changing Risks during 2024

Capricorn has assessed the principal risks and uncertainties at the end of 2024. The principal risks are:

· Increasing EGPC receivables balance

· Volatile oil and gas prices

· Underperformance of Egypt assets

· Failure to replace long-term reserves and resources

· Political and fiscal uncertainties

· Lack of adherence to HSSE policies

· Future challenges and costs as markets transition to net zero

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.

Capricorn's concessions in Egypt are the Group's primary revenue-generating assets and any material political or fiscal country destabilisation could potentially disrupt or, in the extreme, immobilise the Group's Egyptian operations. The Group is actively looking to grow the asset base and considers potential emerging macroeconomic exposures which could degrade the value of opportunities.

Financial Review

Key production statistics

Profit/(Loss) for the Year

Egypt business operating segment results

In Egypt, total revenue was $147m (2023: $200m). $112m (2023: $159m) was generated on sale of liquids with an average price of $79.3 per bbl (2023: $81.2 per bbl) on net entitlement sales volumes of 1,408,300 bbls (2023: 1,959,000 bbls). Gas revenue was $35.2m (2023: $40.8m) from volumes of 12,071,000 mscf (2023: 13,887,800 mscf) at the contracted rate of $2.9/mscf (2023: $2.9/mscf). Additional expected credit loss provisions against revenue receivable led to a charge of $4m (2023: $9m) to the Income Statement.

Cost of sales in the year were $42m (2023: $60m), including inventory movements. Production costs decreased slightly to $4.8 per boe (2023: $5.4 per boe), on working interest production over the year, while depletion charges were $85m (2023: $120m), at a weighted average rate of $25.2 per boe (2023: $22.8 per boe) across the concessions.

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 year, the value of this income and notional tax gross-up is $30m (2023: $54m). 

At the balance sheet date, Capricorn and our partner Cheiron were sufficiently advanced in negotiations with EGPC to amend the terms of the concession agreements on the 50:50 concessions in the BED and Obaiyed areas to allow the modified terms and extended field lives to be incorporated into fair value models used for impairment testing, now performed on a single cash generating unit. The increase in value generated through the expected terms of the new concession is sufficient to reverse previously recorded impairment across the Obaiyed concession area. $16m of an impairment reversal was recorded in the year, with a related deferred tax charge of $7m. In the prior year, impairment was recorded on producing assets of $29m and goodwill of $15m. Related deferred tax credits were $67m. Impairment of goodwill does not reverse in subsequent years.

A fair value loss of $5m (2023: $8m) on the mark-to-market valuation of deferred consideration due relating to the 2021 business combination was recorded in the year, increasing the final instalment due under this transaction to the maximum $25m, which was paid in January 2025.

Net finance costs in Egypt of $18m (2023: $17m), includes loan interest and charges and the total tax charge on Egypt operations for the year is $32m (2023: $40m), being the tax gross-up charge of $30m and a deferred tax charge of $2m. 

Results from other continuing operations

The loss on other continuing operations of $13m (2023: $82m) includes unsuccessful exploration costs of $6m (2023: $18m) with no further general exploration costs in the year (2023: $16m) as the Group ceased all exploration activity outside Egypt. $5m (2023: $16m) of unsuccessful exploration costs related to Mexico and $1m to historic UK licences (2023: $2m across all other countries). Capricorn continued to monitor opportunities to add producing assets to the portfolio, particularly in the UK and MENA, with costs relating to business development activities absorbed within administration charges in the current year.

Net finance income of $7m (2023: $14m) includes interest earned on cash and cash equivalents of offset by finance charges and foreign exchange losses, the lower values in the current year a reflection of reduced cash on the balance sheet following last year's shareholder returns.

A current tax credit of $5m (2023: nil) was recorded in the year in respect of tax refunds due on tax withheld on dividends due from shares previously held in India. The dividends themselves remain subject to ongoing legal challenge and remain a contingent asset.

General and administrative costs (G&A)

Following the restructuring of Capricorn across 2023, reducing the Group's overhead charge has been a key priority. Gross departmental administration charges of $24m (2023: $79m), excluding non-cash depreciation and amortisation charges and share-based payment charges, include redundancy payments in 2023 of $16m. Once remaining historic legacy contracts end, Capricorn expects to achieve further savings bringing total gross G&A down to the Board's stated target of ~$20m per year after adjusting for inflation.

Net administration costs were $24m (2023: $62m) after including the non-cash items above and after deducting timewriting recharges to assets. $3m of net administrative costs related to Egypt (2023: $2m) with the remaining $20m (2023: $60m) incurred in the UK. 

Discontinued operations

The Group made a profit from discontinued operations of $23m during the year following recognition of $50m Senegal contingent consideration offset by losses of $27m relating to historical transactions in the North Sea. No provision for any possible Senegal tax liability has been recorded.

Settlement of earnout consideration due on disposal of UK Producing assets

Under the 2023 settlement agreement Capricorn was due to receive $22m in January 2025 and Waldorf's 25% WI in the Columbus gas field in the UK North Sea. However, Waldorf's ongoing default on its obligations make it highly unlikely that the $22m will be received in full and Capricorn have reduced this receivable to $2m in the balance sheet, reflecting Waldorf's revised settlement offer. The Columbus transfer is also not expected to complete and the related $7m long-term receivable has been fully impaired. A $26m loss has been recorded in the year (2023: net loss of $2m, being a fair value loss on earnout receivable of $40m and a loss on completion of the settlement agreement of $2m offset by a refund of historic costs of $4m and interest received on earnout payments due of $2m).

Further consideration on Senegal asset sale and ongoing tax assessment

Capricorn disposed of its interests in Senegal in 2020. Under the sale agreement, Capricorn was due further consideration of $50m which was received in January 2025. As all conditions relating to the payment of this additional consideration had been met by the balance sheet date, the receivable was recorded during the year, generating income of the full $50m.

In November 2023, Capricorn received notice under the sales agreement from the purchaser, that it had received an assessment from the Senegal tax authorities relating to operations in Senegal, with two assessments raised that could impact Capricorn relating to capital gains tax and registration duties. Capricorn's belief is that neither claim is valid and is working with the purchaser to defend the Group's position. No provision has been made in the financial statements at the year end and it is increasingly likely that international arbitration will be required to resolve this disputed assessment.

Net cash outflow for the Year

 1 Operating cash flow from Cash Flow Statement of $86m, plus add back of $20m of administrative and other costs reallocated

Cash and cash equivalent balances at 31 December 2024 of $123m (2023: $190m) were offset by borrowings in Egypt of $100m (2023: $114m), excluding prepaid facility fees and accrued interest. Cash held outside of Egypt was $78m (2023: $184m), while the net debt of the Egypt business was $54m (2023: $106m). Capricorn have 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 Guarantee. Loan facilities are non-recourse to the Group's non-Egypt assets. Restricted cash balances of $3m (2023: $5m) and $46m (2023: $5m) exist in the UK and Egypt respectively. Egypt restricted cash may be used to fund non-operated concessions in Egypt and make principal and interest payments on the loan facilities.

Total loan repayments in the year were $14m (2023: $48m). The facilities are subject to bi-annual redetermination processes. During the latest redetermination process, the modelling bank discovered an error in its model that had been present since inception and should have resulted in higher repayments falling due from September 2023 onward. Following positive discussions with lenders to resolve this error, the borrowers agreed to higher than previously modelled repayments falling due on the Senior Facility in Q1 2025, with the remaining amounts repayable across 2025 and 2026 as previously forecast. The higher cash balances held in Egypt at the 2024 year end reflect the expected principal and interest payments due to lenders in Q1 2025. The latest banking model was approved in February 2025 and therefore the balance sheet classification of amounts falling due within and greater than one year do not reflect the latest changes.

Balance Sheet

The Group's net asset position at 31 December 2024 is summarised as follows:

Development assets and goodwill

Over H1 2024, Capricorn did not approve further drilling activity in Egypt until there was an improvement in the receivables positions from EGPC. By the end of February 2024, only one rig was operating, completing pre-approved producing wells, down from a maximum of six during 2023. Receipts of $93m across H1 2024 led to a resumption of a three-rig drilling programme in late June 2024. A further $43m was received in H2 2024.

Reduced additions in 2024 of $63m (2023: $91m) reflect this pause in activity and Capricorn will continue to ensure that future drilling commitments are aligned to ongoing cash collections.

Depletion charges in 2024 of $85m (2023: $120m) are based on booked reserves as at 31 December 2024 and take no account of expected upward revisions following the amendment of terms to the concession agreement. Reserves booked at the year end decreased due to the reclassification of reserves not expected to be extracted within the existing licence term. The impairment reversal of $16m includes a restriction to reflect depletion that would have arisen on a higher cost base in the calculation.

Goodwill remains unchanged from the prior year end at $11m.

Other long-term assets

Non-oil and gas property, plant and equipment and intangible assets at the year end totalled $13m (2023: $15m) which includes $7m (2023: $7m) relating to unamortised carbon credits and $5m (2023: $7m) of leasehold offices held as right-of-use assets. Carbon credits are tested for impairment within the Egypt cash generating unit.

Prior year assets included amounts due from Waldorf which have either been reclassified to current assets and impaired or written off in full as previously noted.

Working capital

Working capital outside of Egypt includes the $50m due in relation to Senegal first oil offset by residual balances from the Group's previous international exploration activities and funding of corporate activities.

Egypt trade receivables at the year end were $175m (2023: $169m), an increase of $6m across the year, net of expected credit loss adjustments. $168m (2023: $143m) of this amount was overdue. 

Net working capital liabilities across the Egypt concessions were $100m (2023: $66m), with the increase reflecting a build-up in the payables position at the gross joint venture level as Capricorn preserved cash to ensure debt repayments can be met.

Tax assets and liabilities

Deferred tax assets of $18m (2023: $8m) and deferred tax liabilities of $22m (2023: $10m) are recorded across the concessions in Egypt. Assets and liabilities are calculated on a concession-by-concession basis, having regard to availability of future profits when considering the recognition of deferred tax assets. Although tax is paid on the contractors' behalf by EGPC under the Egypt concession agreements, the liability remains with the contractor until the point of settlement, hence the recording of assets and liabilities on the balance sheet.

The non-Egypt current tax receivable of $4m relates to the India tax refunds and is included in working capital above.

Equity movements

Across 2024 Capricorn returned $57m (2023: $560m) to shareholders, $50m (2023: $541m) by way of dividends and $7m (2023: $19m) in share repurchases, bringing the latter programme to an end. The Company undertook share consolidations in conjunction with the payment of these dividends in both years. 

Across the year, Capricorn acquired $11m (2023: $20m) of its own shares to meet anticipated share awards to current and past employees. $10m (2023: $28m) of shares vested in the year.

Capricorn Energy PLC

Group Income Statement

For the year ended 31 December 2024

Group Statement of Comprehensive Income

For the year ended 31 December 2024

Capricorn Energy PLC

Group Balance Sheet

As at 31 December 2024

Capricorn Energy PLC

Group Statement of Cash Flows

For the year ended 31 December 2024

Capricorn Energy PLC

Group Statement of Changes in Equity

For the year ended 31 December 2024

Section 1 - Basis of preparation

1.1 Material accounting policies

a) Basis of preparation

The Consolidated Financial Statements of Capricorn Energy PLC ("Capricorn" or "the Group") for the year ended 31 December 2024 were authorised for issue in accordance with a resolution of the Directors on 27 March 2025. 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).

All accounting policies have been applied consistently across all years 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 International Accounting Standards Board 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 2025 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 22 May 2025 at 10am.

Section 1 - Basis of preparation (continued)

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. The cash flow forecasts assessed for the going concern assessment cover the period to March 2026.

As the Directors will not commit to investing further Group 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. At the year end and at the date of this report, events of default exist on the facilities.

Group cash flow forecasts have been run on base-case and downside assumptions. Base case assumptions include committed exploration costs for which a parent company guarantee has been issued and forecast administrative costs. A downside scenario includes an increase to administrative costs, a tax settlement payable in Senegal and additional payments coming due under joint and several obligations. Scenarios run exclude future returns to shareholders. For Egypt cash flows, along with base-case assumptions, a downside scenario run modelled a return to lower oil prices, with an oil price of $65/bbl over the first six months of 2025 falling to $60/bbl thereafter, a 20% reduction in forecast production from 2026 onward and reductions to collections against outstanding Egypt trade receivables. An oil-price crash scenario assumes a fall in the oil price to $40/bbl at the end of Q1 2025 with a recovery to $50/bbl by the end of 2026. All Egypt cash-flow forecasts assume that the lenders do not enforce current events of default and seek immediate repayment of the facility.

Under both Group scenarios Capricorn 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 2 - Oil and gas assets and operations

2.1 Gross profit: revenue and cost of sales

Revenue

Capricorn recognised oil and gas revenue on 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. All sales in the year were domestic sales.

Oil and gas revenue in Egypt for the year ended 31 December 2024 was $146.8m (2023: $199.9m), from net entitlement production of 3.6 mmboe (2023: 4.4 mmboe) of which ~39% (2023: ~45%) was liquids. Oil sales averaged $79.3/boe (2023: $81.2/boe) and with gas sales at $2.9/mcf (2023: $2.9/mcf). Other income represents tax paid on Capricorn's behalf by EGPC - see section 5.

Production costs over the period were $41.6m (2023: $59.6m), or $4.8/boe (2023: $5.4/boe) (on a working interest (WI) basis).

Section 2 - Oil and gas assets and operations (continued)

2.2 Intangible exploration/appraisal assets

Additions to intangible exploration/appraisal assets were funded through cash and working capital, including increased provisions for well abandonment costs.

Egypt

Unsuccessful exploration costs of $2.5m relate to work performed on well locations that are no longer expected to be drilled.

Other countries

Additions of $6.4m (2023: $16.9m) relate to an increase of $1.7m (2023: $1.9m) on estimated historic UK well abandonment costs, and $4.7m (2023: $15.0m) of past costs no longer expected to be recovered following the exit of from all remaining licences in Mexico. All additions were immediately written off as unsuccessful exploration costs.

Section 2 - Oil and gas assets and operations (continued)

2.3 Property, plant & equipment - development/producing assets

Egypt

Additions have been funded through cash and working capital wholly within the Egypt business. Capricorn continue to align capital investment in the Egypt assets with payments received against the outstanding trade receivables balance. Additions in the year predominantly relate to the costs of producing wells drilled. Only one well completed in the first half of the year as Capricorn paused investment pending collection of receivables due from EGPC. Drilling recommenced on 29 June 2024 and a further 12 wells were completed before the end of the year, with a further well that spudded on 18 December completing in January 2025. All but one of the wells was drilled in the BED concession, with the other drilled in the AESW concession.

Depletion of $85.1m (2023: $120.4m) 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

At 31 December 2024, the Group's development/producing assets in Egypt were reviewed for indicators of impairment or reversal of previous impairments. Following significant progress on the revised PSC with EGPC at the year end, the anticipated increased field lives and improved commercial terms were an indicator that previous impairments may be reversed. Impairment tests were conducted across the BED and Obaiyed concessions as a single CGU and resulted in the full reversal of prior year impairment after adjusting for additional notional depletion. Given the significant headroom generated by the increase in fair value under the improved terms, there are no reasonable changes to assumptions that would reduce the reversal of impairment recorded, therefore no sensitivity analysis has been provided. AESW and NEAG concessions were reviewed for indicators of impairment but as no indicator was identified, no impairment tests have been performed.

At 31 December 2023, indicators of impairment were identified where a pause in development drilling activity had resulted in downgrades to reserves volumes booked, with previously booked reserves no longer expected to be recovered within the licence term. Subsequent impairment tests identified impairment of $29.1m.

Section 2 - Oil and gas assets and operations (continued)

2.4 Other long-term receivables

Under the earnout consideration settlement agreement with Waldorf, Capricorn agreed for part-settlement of consideration due through the receipt of Waldorf's 25% WI non-operated interest in the UK Columbus gas field, subject to approval from the North Sea Transition Authority ("NSTA"). The settlement agreement provided that a $7.0m payment to Capricorn would be due should the transfer not receive NSTA approval, and this sum was recorded as an other long-term receivable in the prior year. With Waldorf's liquidity issues and proposed restructuring, NSTA approval of the transfer is not expected and, as recovery of the cash alternate appears highly unlikely, the receivable has been impaired in full. The $20.6m of deferred consideration due at 31 December 2023, also relating to the Waldorf settlement agreement, were reclassified as current assets during the year where amounts due were further impaired.

Section 3 - Working capital, financial instruments and long-term liabilities

3.1 Cash and cash equivalents

At 31 December 2024, $48.7m (2023: $10.6m) of cash and cash equivalents are restricted and not available for immediate ordinary business use. This includes $45.5m (2023: $5.6m) of cash and cash equivalents in Egypt.

3.2 Loans and borrowings

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 2024 was $60.1m (2023: $73.6m) for the Senior Debt Facility and $40.0m (2023: $40.0m) for the Junior Debt Facility. All drawings in the year were denominated in US dollars.

With effect from 1 July 2023, the Secured Overnight Financing Rate (SOFR) replaced LIBOR as the benchmark for calculating interest on the two facilities. Interest on debt drawn is charged at the appropriate SOFR for the currency drawn plus an applicable margin. The Senior Debt Facility remains subject to biannual redeterminations, has a market standard suite of covenants, including biannual liquidity tests, and is cross-guaranteed by the Group companies party to the facility, including Cheiron. Capricorn has provided no guarantee outside the subsidiary holding the Egypt assets.

At 31 December 2024, the borrowers have agreed a rollover of the debt, giving the Group the ability to defer settlement of the loan in accordance with the last approved banking model. Capricorn and Cheiron were seeking a waiver from the lenders for events of default under the facilities that had occurred previously together with approval of the latest banking model and redetermination.

In conjunction with the waiver request, a revised banking model was approved in February 2025 on completion of the latest redetermination process and increases the principal amounts repayable by Capricorn under the Senior Facility to $42.6m in 2025, with the balance of $17.6m due over the period from 1 January 2026 to end of September 2026. The Junior Facility is forecast to be repayable across 2026 and 2027. The increase in the principal repayment in 2025 corrects an error identified in the banking model, which was used to determine previous payment profiles and the allocation between current and long-term liabilities at the year end.

Section 3 - Working capital, financial instruments and long-term liabilities (continued)

3.3 Trade and other receivables

Trade receivables relate to the Group's producing assets in Egypt. Capricorn remain in discussions with EGPC to manage the receivables position and retain the capability to restrict further investment in Egypt to match revenue collections. At 31 December 2024, the expected credit loss adjustment offsetting receivables is $8.7m (2023: $9.0m). $4.2m of prior year expected credit loss adjustments were offset against historic invoices where no further recovery is expected leaving a net charge of $3.9m to the Income Statement in the year.

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.

The other receivables balance of $54.1m (2023: $11.0m) includes $50.0m of contingent consideration due from Woodside (see note 6.1 for details) (2023: $nil), interventure receivables of $0.6m (2023: $1.4m), VAT recoverable in the UK of $0.1m (2023: UK and Mexico $3.6m), money market interest receivable of $0.9m (2023: $0.6m) and the earnout settlement receivable of $1.5m (2023: $2.0).

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 liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss - deferred consideration on business combination

Deferred consideration was due to Shell following the Egypt business combination in 2021, with amounts due linked to the average annual dated Brent oil price for each year up to and including the current year end. A maximum $50.0m is due for each year, split 50:50 between Capricorn and Cheiron, with both parties joint and severally guaranteeing settlement by the other, where the average oil price exceeds $75/bbl. The full $25.0m was payable in respect of 2023 and 2024 and settled in May 2024 and January 2025 respectively. No further amounts are due to Shell from Capricorn though the Group remain joint and severally liable were Cheiron to default on their remaining payment due.

During the year, the Group made a loss of $5.2m (2023: $8.0m) on fair value movements increasing the financial liability to the full $25.0m due.

3.5 Trade and other payables

Joint operation payables include $13.7m (2023: $6.4m) and $89.9m (2023: $66.9m) relating to exploration/appraisal asset and development/producing asset costs respectively. $99.6m relates to the Group's operations in Egypt

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.

Section 4 - Income Statement analysis

4.1 Segmental analysis

The segment results for the year ended 31 December 2024 are as follows:

Revenue in the Egypt segment contains revenue generated from eight concessions in the Western Desert, onshore The Arab Republic of Egypt. 94.0% ($138.0m) 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 2023 are as follows: