Capricorn Energy shares slump despite $575m payout pledge

27th Apr 2023 08:25

(Sharecast News) - Troubled oil and gas producer Capricorn Energy is planning to give shareholders $575m in payouts after a failed merger, boardroom clearout and radical cut in operations.

The company on Thursday said it would pay a $450m special dividend next month, with a further $100m in the fourth quarter and a share buyback of at least $25m

The final-quarter payout will depend on revenue from its Egyptian assets, the central plank of its new plan, and the outcome of negotiations over its Egyptian licences as well as movements in oil and gas prices this year.

Capricorn has already started selling its UK interests in the Catcher and Kraken fields as the company offloads or reduces non-Egyptian assets, including licences in Mexico, Mauritania and Suriname.

Capricorn also announced the appointment of Randy Neely, who headed up Egypt-focused oil and gas producer TransGlobe, as new chief executive from June 1.

The company was thrown into turmoil earlier this year after a shareholder revolt over its plans to merge with Israeli gas producer NewMed Energy that resulted in a new board mostly comprising members proposed by activist investor Palliser.

Palliser and some of Capricorn's biggest shareholders had publicly opposed the merger, and major shareholder advisory groups had also recommended rejecting the plan.

Last month it announced plans to fire 75% of UK staff as part of the new strategy.

Capricorn announced a planned merger with Israeli gas company NewMed in September, valuing Capricorn shares at 271 pence, including a $620m, a 13% premium over the previous day's price. Capricorn shares plunged more than 10% to 217p each on Thursday.

In February it abandoned the deal after opposition from shareholders, including Palliser Capital, saying the merger with NewMed was "another one-sided deal that does not reflect the company's intrinsic value" and urging the company "to recognise that it need not be a forced seller".

Reporting by Frank Prenesti for Sharecast.com