Capricorn Energy plans $575 million in shareholder payouts under a new CEO with experience of renegotiating Egyptian licenses, it said on Thursday, after two mergers failed amid investor revolts that also toppled its previous leadership.
The company plans to commit $450 million to a special dividend to be paid to shareholders in May, a further $100 million in the fourth quarter and a share buyback of at least $25 million. "We are not in the business of building war chests in the new Capricorn," Chair Craig van der Laan told Reuters in a phone call.
Capricorn said the $100 million payout depended on how much revenue was generated by its Egyptian assets, which form the core of its new strategy, and the outcome of negotiations over its Egyptian licenses as well as movements in oil and gas prices this year. Capricorn also had $97 million in receivables outstanding from Egypt as of the end of last year.
"We're very confident about the return of the $575 million plus over the next 12 months," van der Laan said, adding any one of the above factors could support the $100 million payout. A process has started to sell its British licenses as part of its move to scale back or sell its non-Egyptian assets, which include licenses in Mexico, Mauritania, and Suriname.
Capricorn also announced the appointment of Randy Neely, until recently head of Egypt-focused oil and gas producer TransGlobe, as new chief executive from June 1. "He oversaw the negotiations (for TransGlobe) which resulted in the arrangements with (Egyptian authorities) being renegotiated very, very, very successfully to generate value for shareholders," van der Laan said.
A capital markets day is planned for the fourth quarter.
DERAILED MERGER
When Capricorn announced a planned merger with Israeli gas company NewMed in September it said the deal valued Capricorn shares at 271 pence, including a $620 million special dividend, which was a 13% premium over the previous day's price.
Capricorn shares closed at about 243 pence on Wednesday.
The old leadership said that, without the deal, no more than $500 million could be paid out, but a group of shareholders led by activist investor Palliser said the terms undervalued Capricorn, eventually succeeding in derailing the merger.
One shareholder who supported Palliser said, on condition of anonymity, that "in hindsight we would have taken the shares from the NewMed merger, but we didn't know BP/Adnoc would offer a 70% premium (for a stake in NewMed) ... hindsight is a beautiful thing."
Palliser said in a statement: "We support the new Board’s long term strategic direction, including the appointment of a permanent CEO with a strong track record of value maximization in Egypt, and are confident that Capricorn is now well-placed to deliver on the significant potential of the asset base and optimize value for shareholders."
Capricorn shares were down around 7.5% at 224.4 pence at 0737 GMT, on course for their worst drop in percentage terms in just over a year and hitting their lowest since August. An index of European oil and gas firms was down around 1%.
(Reuters - Reporting by Shadia Nasralla/Editing by David Goodman and Mark Potter)