Capricorn Energy PLC has confirmed that it has been informed by the Egyptian General Petroleum Corporation of its approval for the consolidation of eight of the company’s existing concession agreements in Egypt into a single, integrated concession agreement. Capricorn holds a 50 percent participating interest in the concessions, jointly with Cheiron Oil and Gas Limited (Cheiron), the operator. The newly integrated concession is subject to ratification by the Egyptian Parliament, which is expected to take place in 2025.
The new agreement features improved commercial terms and a refreshed development timeline, designed to support increased investment and production for the benefit of all stakeholders.
Key Elements of the Integrated Concession
The development concessions of Badr El Din (BED), Obaiyed, North Alam El Shawish, North Matruh, Sitra, BED 3, BED 2 and BED 17, along with the North Um Baraka exploration concession, will be merged into a single integrated concession agreement. This agreement allows for a 20-year life, comprising an initial 10-year term with two potential five-year extensions.
Improved fiscal terms have been agreed to incentivise increased oil and gas production through investment. These include:
Profit share of 27–29 percent
A merged single cost pool
40 percent cost recovery over four years
Excess cost recovery of 20 percent
An enhanced gas price of $4.25/mmbtu has been agreed for incremental gas volumes from both existing fields and new discoveries, to encourage gas production growth.
Four additional blocks will be integrated into the BED 17 development area.
Two open exploration areas adjacent to existing acreage will be awarded directly and incorporated into the integrated concession, with a commitment to drill 11 gross exploration wells.
These enhancements are projected to increase Capricorn’s internally estimated working interest unrisked best estimate contingent resources to 332 million barrels of oil equivalent. Of this, approximately 20 mmboe—subject to risk assessment and external audit—are expected to convert to 2P reserves following ratification, with further conversions anticipated at year end and during annual reserve reviews.
In return for its 50 percent WI share, Capricorn will pay EGPC a $10 million signature bonus post-ratification, followed by two additional payments of $5 million on the first and second anniversaries of the agreement’s signature. These payments, totalling $20 million, are expected to be offset against Capricorn’s receivables balance with EGPC.
The company has committed to a five-year work programme with an investment of approximately $100 million (WI share), primarily focused on drilling. Additionally, Capricorn has the right to recover 70 percent of the carried-forward cost pool from the original concessions and 100 percent of any unrecovered costs, in accordance with their original amortisation schedules.
Executive Commentary
Randy Neely, chief executive of Capricorn Energy, stated:
“This agreement marks a key milestone in unlocking further value in our Egyptian Western Desert asset base. The three partners—EGPC, Cheiron and Capricorn—have dedicated significant time and effort to developing a business case that benefits all parties. The improved terms and consolidation of the development leases will enable increased investment to unlock significant contingent resources, ultimately leading to higher production and reserves.
With this progress, we and our partners will now begin efforts to achieve a similar outcome for the Alam El Shawish West (AESW) joint venture. This agreement represents an important step in restoring Capricorn as a premier small-cap energy company. Alongside our achievements in Egypt, we continue to assess material opportunities in the UK North Sea. Together, these initiatives will strengthen Capricorn’s sustainability and enhance its appeal as an energy investment.”
For more information visit www.capricornenergy.com
