Edinburgh-based oil and gas firm Capricorn Energy has seen its shares plunge amid concerns it may miss out on a potential $50 million (£38m) payment in respect of the sale of a big find it made off Senegal.
The former Cairn Energy struck a deal in 2020 to sell the Sangomar find to Australia’s Woodside Energy for an initial $300 million plus further payments it agreed would be conditional on commodity prices and the timing of first production from the field.
Capricorn noted an announcement by Woodside in which the firm said targeted first oil has moved from late 2023 to mid-2024.
Capricorn said it remains exposed to a contingent payment of between US $25m and US$50m if first oil is achieved in the first half of 2024 and the average Brent oil price during the first six months of production exceeds the $55 per barrel or $60/bbl thresholds contained in the sale and purchase agreement.
It cautioned: “There is no payment if first oil is achieved later than H1/2024.”
Shares in Capricorn Energy closed down eight per cent, 15.2p, at 177p yesterday on the London Stock Exchange.
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Cairn caused a stir when it made the Sangomar find in 2014 under the leadership of former chief executive Simon Thomson.
Sangomar was reckoned to have been the biggest oil find made in the world that year.
Mr Thomson stepped down from the Capricorn board along with other members of the management team in January following a campaign for change led by a rebel investor. Palliser Capital opposed Mr Thomson’s plans to merge Capricorn with Tullow Oil and then with Newmed Energy.
The new management team has decided that Capricorn should focus on the Egyptian production assets that the company acquired from Shell under Mr Thomson’s leadership.
At Capricorn’s general meeting last month chief executive Randy Neely said Capricorn would divest or relinquish its assets outside Egypt in as timely a manner as possible. The company has launched a cost-cutting drive that looks set to result in hefty job losses.
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Mr Neely told the meeting that Capricorn planned to pay a special dividend of $100m in the fourth quarter under a plan to return $575m to shareholders. It paid $450m dividends in May.
Chairman Craig van der Laan said then: “It remains our intention to release further surplus capital moving forward, in addition to that already announced. This includes a contingent payment from the sale of our Senegal business due following first oil, which we intend to release in full to shareholders as soon as practicable after it is received.”
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