Capricorn Energy plans Egypt campaign
Capricorn Energy said on March 8 it is preparing to spud two exploration probes in the South Abu Sennan concession onshore Egypt, which it acquired from Shell in early 2021.
The deal with Shell for the 11 Western Desert concessions was completed in the third quarter, Capricorn said in its full-year financial results for 2021. These include eight exploration, development and production concessions operated by Cheiron Petroleum, and three new exploration prospects operated by Capricorn.
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Capricorn has a 50% working interest in the two wells at South Abu Sennan which are due to commence drilling in the second half of this year. They are the first in a drilling campaign that will cover all of Capricorn's operated Western Desert concessions, extending through to the end of 2023.
Capricorn's non-operated NUMB W1 exploration well, in Cheiron's North Um Baraka concession, was drilled in the fourth quarter of 2021 and has now been temporarily plugged. 3D seismic acquisition at North Um Baraka will begin in the first quarter of this year, with Capricorn again holding 50% working interest.
"These new, high-resolution seismic surveys will provide significant improved imaging in prospective areas and will be particularly beneficial in imaging the deeper and under-explored Jurassic and Palaeozoic sections," the company said.
Capricorn recorded an operating loss of $131mn in the 2021 financial year but an $895m post-tax profit after it secured a $1bn tax refund from India, following its exit there in 2011. It finished the year with gross cash availability of $314mn, including $133mn in net cash after factoring debt drawn to fund its initial $181mm contribution to the Egypt deal.
It says the Western Desert holds significant short-cycle exploration potential. Drilling targets were identified following the Shell deal and Capricorn now has firm commitments to nine wells and three seismic acquisition programmes by 2025.
Capricorn, formerly known as Cairn Energy, bought the Western Desert portfolio last March in a deal potentially worth $946mn. The deal added 113mn barrels of oil equivalent to Capricorn's working interest 2P reserves and also included investment by Cheiron Petroleum.
Its working interest from existing Egypt oil and gas assets averaged around 36,500 barrels/day of oil equivalent in 2021, landing at the middle of its guidance range. Revenues from the company's Egyptian portfolio reached $56m, with its realised oil price averaging $77.80/b and gas prices at $2.90/'000 ft3.