Capricorn Energy (LON:CNE) outlined what management described as a pivotal year in 2025, pointing to improved collections in Egypt, the early repayment of senior debt, and progress toward a consolidated concession framework that the company believes can support renewed investment and production performance.
Middle East backdrop and takeover speculation
Chief executive Randy Neely opened the call by noting the “evolving situation in the Middle East,” specifically referencing conflict involving the U.S., Israel, and Iran. He said Capricorn was monitoring developments, but that operations in Egypt were stable and “unaffected,” describing the situation on the ground as “business as usual.”
Management highlights: “turnaround” to growth focus
Neely said 2025 marked a significant year “operationally, strategically, and financially,” and argued the company has moved from a turnaround story to a “serious growth opportunity” in Egypt, and potentially in the U.K. North Sea. He highlighted:
- A material reduction in accounts receivable outstanding, which he said enabled a “significant reduction” in accounts payable.
- Retirement of the company’s senior debt, leaving an “almost debt-free” balance sheet.
- Approval by the EGPC board for the consolidation and amendment of eight jointly held production sharing contracts with Cheiron in the Western Desert, with ratification still pending and expected “in the near term.”
Following EGPC board approval, Neely said the company and its partner began increasing development activity to address production declines. Combined with technical work, he said this resulted in Capricorn achieving the higher end of its 2025 production guidance.
Financial and operational performance: production, costs, cash, and receivables
CFO Eddie Oke described 2025 as a “solid year,” citing both operational milestones in Egypt and what he called balance sheet cleanup. On production, Oke said output was “just over 20,000” barrels of oil equivalent on a working interest basis, with a 40% liquids weighting. Operating expenditure rose slightly year over year to $5.40 per BOE, which he attributed to the fixed cost base and currency devaluation effects from the prior year largely working through the system. For 2026, Capricorn guided to OpEx of $5-$7 per BOE.
Oke said a $77 million capital program in 2025 supported production performance and helped set a foundation for the 2026 program. He also pointed to material collections of $217 million in 2025, with an $86 million receivables balance at year-end and $81 million of net cash flow from Egypt. He said that after repaying the senior facility early, only $30 million remained outstanding on a ring-fenced junior facility.
Capricorn ended 2025 with $103 million in cash net of facility debt, representing an $80 million year-over-year cash increase, Oke said. He added that the company continues lobbying EGPC to bring receivables down to a “reasonable level,” and said management was encouraged by recent comments from EGPC and the minister about receivables balances for international oil companies, remaining confident in ultimate collection of outstanding revenues.
2026 outlook: production range, capex priorities, and ratification importance
For 2026, Oke said the drilling completed in 2025 and the planned 2026 program is expected to shift production to a slightly higher liquids weighting of about 43%. However, he noted that two planned turnarounds will impact full-year estimates, and the company guided to 18,000-22,000 BOE. Capricorn guided to 2026 capital spending of $85 million-$95 million, with prioritization toward liquids. Oke emphasized that concession ratification will be “critical” to unlocking additional exploitation and development activity.
COO Jeff Probert characterized 2025 Egypt activity as a “year of two halves,” with the first half focused on legacy exploration obligations and the second half pivoting four rigs toward development drilling. Probert said that without the EGPC agreement to merge concessions and improvements on payments, the company would not have been able to support much further development drilling after completing first-half exploration commitments. He said development drilling was “reopened” on BED and, together with reservoir management work, contributed to improved production performance and a solid year-end exit rate.
On exploration, Probert said legacy work led to success at NUMB and “encouragement” in Southeast Horus, with Southeast Horus results sufficient to move into the next phase.
Reserves and resources: reserve replacement and resource runway
Probert discussed the impact of the merged concession agreement on reserves and resources, reiterating management’s view that improved concession longevity and fiscal terms provide catalysts for increased reserves and production, supported by increased investment funded from Egypt. He cited an example of “approximately $5 per barrel” improvement in netbacks at $80 Brent, and said the company replaced more than 200% of 2025 production through reserve additions, with the merged concession described as a major contributor.
He said the company had previously highlighted potential to convert up to 20 million barrels of working interest resources into reserves with the merged concession, and stated that the company had achieved this, referencing a 277% reserve replacement ratio. Probert also said the company identified “over 330 million barrels of oil equivalent” of unrisked working interest 2C resources as a maturation runway, with 80 million barrels of oil equivalent evaluated by GLJ.
Q&A: growth potential, capital allocation, and receivables mechanics
Asked about a competent person’s report production profile suggesting potential growth toward 25,000 barrels per day by 2027, Probert said it would depend on activity levels and other in-country factors. He referenced a program across the Badr area, potential under new gas pricing at Obaiyed, and previously announced activity including a successful Bahariya well in Badr to the east of the merged concessions, as well as the new development lease and Sitra North. He said the “runway towards that is very robust,” while adding he would not guarantee it.
On the balance sheet, management said shareholder returns and capital allocation were “front and center,” but noted several considerations, including capital commitments under the new concession agreements and ring-fencing of the Egypt operations from the PLC, which has contingent liabilities disclosed in the financial statements.
In webcast questions, management confirmed that bonus payments to EGPC on ratification are typically handled as deductions from receivables, assuming EGPC continues to owe funds given ongoing monthly revenue billing. On receivables trends, the company said there has been consistent messaging from the ministry and EGPC about incentivizing IOC investment, with receivables collection performance viewed as a key measure; management said consistent payments are supporting Capricorn’s planned capital program and that the new concession agreement adds commercial incentives for larger investments.
In closing remarks, Neely said Capricorn is positioned to build cash flow and shareholder value, with a focus on technical rigor and cost discipline, and with intentions to expand in Egypt and pursue opportunities in the U.K. North Sea, while awaiting final ratification of concession terms.
About Capricorn Energy (LON:CNE)
Capricorn is a cash flow-focused energy producer, with an attractive portfolio of onshore exploration, development and production assets in the Egyptian Western Desert.
Capricorn is headquartered in Edinburgh, Scotland.
For further information please see: www.capricornenergy.com
