Capricorn Energy plc is closer to integrating eight of its existing joint venture Egyptian Western Desert concessions into a new, single concession with improved commercial and development terms.
PRODUCTION
The Egyptian General Petroleum Corporation (EGPC) granted consent to the company and its partner Cheiron Oil and Gas Ltd, each holding 50%.
The new concession agreement remains subject to Egyptian parliamentary ratification, expected during 2025.
The partners have also started work on a similar business case for the Alam El Shawish West joint venture.
The JV holds eight development concessions of Badr El Din (BED), Obaiyed, North Alam El Shawish, North Matruh, Sitra, BED 3, and BED 2 and BED 17 as well as the North Um Baraka exploration concession.
Under the agreement, BED 17 will have four additional blocks and the existing acreage of the integrated concession will have two further open exploration areas, which need 11 exploration wells.
The single concession will have a 20-year life over an initial 10-year term, and two five-year extensions for the development areas.
Improved fiscal terms for increased oil and gas production will include a 27-29% share of the profits, a merged single cost pool, 40% cost recovery over four years, and excess cost recovery of 20%.
The JV has also secured an improved gas price for increased gas produced from existing fields and new discoveries promoting increased gas production.
Capricorn said that internally estimated working interest unrisked best estimate contingent resources volume would increase to 332 mmboe.
Of that number, up to 20 mmboe are expected to convert to 2P reserves with further incremental conversions expected.
On signing the new agreement, the company will pay EGPC a bonus of $10m, and two further bonus payments of $5m on the first and second anniversaries of the signature date.
The agreement will also involve a drilling programme during the first five years of $100m, working interest share.
“The three partners: EGPC, Cheiron and Capricorn have put in significant time and effort to construct a business case that allows all parties to benefit,” added chief executive Randy Neely.
“The development potential of these assets is fully capable of being funded by cashflows generated in Egypt.
“We believe this agreement is a very important step in restoring Capricorn as a premier small-cap energy company.
“In addition to our achievements in Egypt, we continue to actively evaluate material opportunities in the UK North Sea.
“Combined, these initiatives will make Capricorn significantly more sustainable as a business and attractive as an energy investment.”