Capricorn Energy Stock

Good morning, and welcome to the Capricorn Energy PLC Full Year Results Investor Presentation. [Operator Instructions]

Before we begin, I would like to submit the following poll. And I would now like to hand you over to CEO, Randy Neely. Good morning to you, sir.

Good morning, and good morning to everyone, and thank you for joining us for Capricorn's 2025 Full Year Results Presentation. I'm joined today by our CFO, Eddie Ok; and our COO, Geoff Probert. First, let me take a moment to address the evolving situation in the Middle East, particularly the conflict involving the U.S., Israel and Iran. We are closely monitoring the developments, but our operations remain stable and unaffected. It is very much business as usual for us on the ground. But before we also dive into the presentation, I want to briefly address the recent speculation regarding a potential offer for Capricorn.

I understand there may be considerable interest, but due to the takeover code, I'm unable to provide any specific information beyond what was in our statement earlier this month. To reiterate, Alamadiyaf al-Masiyyah, also known as the Cafani Group, has made multiple unsolicited nonbinding proposals for potential all-cash offer for Capricorn.

Discussions are ongoing, and the Capricorn Board is actively seeking further clarity regarding Cafani's funding arrangements. Under the U.K. takeover code, they have until the 8th of April 2026 to make a firm offer. At this stage, there is no certainty that a firm offer will be made nor clarity on the terms of any such offer should one materialize.

So let's get into the presentation. 2025 was a significant year operationally, strategically and the financial progress made for the company, and a number of milestones were met across our Egyptian operations. 2025 marked a pivotal year for Capricorn. I believe we may have made the turn from a turnaround story to a serious growth opportunity in the Egypt and hopefully shortly, the U.K. North Sea arena.

Over the past year, accounts receivable outstanding has come down materially, which allowed a significant reduction in accounts payable as well as retiring the company's senior debt. We also received the approval from the EGPC Board for the consolidation and amendment of the 8 jointly held production sharing contracts with Cheiron, our operating partner in the Western Desert.

We are now only awaiting ratification, which we expect in the near term. Following EGPC Board approval, jointly with our partner, we were able to begin increasing our development activities to arrest the production declines. This, combined, of course, with the very solid technical work of our team resulted in our achieving the higher end of our production guidance. We put this graphic into our materials over a year ago to represent our base intentions and where we're going to take the company. Hopefully, our results are showing that we meant it.

We now have an almost debt-free balance sheet. We have a disciplined and rigorous approach that we operate within and project on to our partner. And to be very clear, our partner has been receptive to this and has worked very collaboratively with us over the past year plus to allow a very -- sorry, to follow a very similar approach.

We are now set to take advantage of all the hard work accomplished over this past 3 years, rebuilding Capricorn. In the near term, we will look to build on our base in Egypt, both organically and through acquisitions and also look to capitalize on our geographic location and capabilities in the U.K. North Sea.

I'll now turn it over to Eddie, who will walk through some of our results and guidance for 2026.

Thanks, Randy, and good morning, everyone. 2025 was a solid year as we not only achieved some key structural milestones in the Egypt business, but also really cleaned up our balance sheet. Production was just over 20,000 BOEs on a working interest basis, and we preserved a 40% liquids weighting in that production base. OpEx increased slightly over the prior year at $540 per BOE, driven by our fixed cost base and the currency devaluation from the prior year, having largely worked its way through the system. We're guiding to an OpEx range of $5 to $7 a BOE for 2026.

A successful capital program in 2025 of $77 million invested, drove production performance in the year and set a sustainable foundation for '26's program. We had material collections in 2025 of $217 million, resulting in us ending the year with an $86 million receivables balance on $81 million in Egypt net cash flow. With only $30 million outstanding on a ring-fenced junior facility and having repaid the senior facility early, we entered '26 with a significantly improved balance sheet.

The business ended 2025 with $103 million in cash, net of facility debt, which represents a year-over-year cash increase of $80 million, and we continue lobbying efforts with EGPC to return our receivables to a reasonable level. We are encouraged by the recent press from EGPC and the minister about receivables balances for IOCs and remain confident in the ultimate collection of our outstanding revenues.

For 2026, the drilling activity completed in '25 and planned '26 activity will shift overall production to a slightly higher liquids weighting at about 43%, though 2 turnarounds planned for the year will impact full year production estimates as we guide to 18,000 to 22,000 BOEs per day. Capital of $85 million to $95 million this year will prioritize liquids and ratification will be critical to unlock acreage perspective for additional exploitation and development activity.

Next up, Geoff is going to take you through our operational plans for the year.

Thanks, Eddie, and good morning, everyone. Next slide. 2025 Egypt operational activity was a year of 2 halves, with the first half primarily fulfilling legacy exploration obligations and the second, pivoting the 4 rigs to development drilling. It's worth noting here that without the EGPC agreement to merge our 50-50 concessions and improvements on the payment side, we would not have been able to support much further development drilling there post the first half exploration commitments. So the timing was excellent for all parties.

Development drilling was effectively reopened on BED, which supported by the ongoing reservoir management program contributed to improved production performance and a solid year-end exit rate. The legacy exploration yields success in NUMB and encouragement in Southeast Horus with the latter sufficient to move into the next exploration phase.

Next slide, please. Much of this is a reiteration of what we've said on the merged concession before with improvements in concession longevity and fiscal terms a catalyst to increase Capricorn's reserves and production with value and cash flow enhanced through increased investment self-funded from Egypt.

Two bullets I'd like to highlight are first, the example, approximately $5 per BOE improvement in netbacks at $80 a barrel Brent; and second, replacement of more than 250% of our 2025 production through reserve adds with the merged concession being a major contributor to that.

For EGPC, our increased and more importantly, sustained investment delivers greater production over the long term for Egypt, having the potential to be a true win-win for all stakeholders. We continue to expect customer ratification in the near future with our investments since mid-2025, consistent with the application of the new terms.

Next slide. This final operational slide demonstrates the impact of the new merged concession agreement on reserves and resources underlying our business. We previously highlighted the potential to convert up to 20 million barrels approximately working interest resources and reserves into reserves with the merged concession. We've achieved that as the 277% reserves replacement ratio shows.

We've already identified a resource maturation runway with a further 332 million barrels of oil equivalent unrisked working interest 2C, of which around 80 million barrels of oil equivalent has been evaluated by GLJ. With some prospective resources to chase and discussions underway to improve the ASW concession, these are a bonus. All in all, the new merged concession supported by operational excellence and regular EGPC payments has helped transform the outlook for Capricorn Energy.

Thanks for your time and attention. I'm now passing it back to Randy to wrap up.

Thanks, Geoff. So in closing, I would like to emphasize that we are now positioned to take advantage of all the hard work undertaken over the past 3 years. We are near debt-free with net cash of over $100 million at the end of 2025, thanks in part to regular robust collections of our revenues over the past 15 months and in particular, the last 6 months of 2025.

We have new terms to the bulk of our concession agreements now just awaiting ratification, which we expect to happen shortly. We have a strong and collaborative working relationship with our joint venture partner, Cheiron. Our technical team has identified significant contingent resources for the JV to mature and exploit. We continue to be laser-focused on building cash flow and shareholder value. And our plan is to do that by continuing to employ technical rigor, be focused on costs and details and by seeking out opportunities to expand our operations in Egypt and realizing on our advantaged position in the U.K. North Sea. I want to thank everyone for attending. We're going to open the floor for questions, but I'll remind you that we will not be able to make any comments on the potential offer for Capricorn as mentioned in the opening.

That's great, Randy, Eddie, Geoff. Thank you very much indeed for your presentation. [Operator Instructions] I would like to remind you that a recording of this presentation, along with a copy of the slides and the published Q&A can be accessed via investor dashboard. And Diana, at this point, if I may hand back to you to take us through the Q&A session, and I'll pick up from you at the end. Thank you.

Thanks very much, Alex. So we have 2 questions that have been submitted. Thank you very much for submitting them. Just to say any that aren't answered on the call will be followed up via the Investor Meet platform with a written response from the company. So to our presenters, first of all, we have the question, you mentioned M&A in Egypt and the broader MENA region. What valuation thresholds or return hurdles are you applying in the current oil price environment?

Well, given the recent changes in oil prices, we haven't factored any change -- long-term changes into our analysis at this stage. We do, however, always look for a reasonable rate of return on any investments. And for us, that typically means kind of starting with a 25% rate of return given just generally the business itself and, of course, the region.

And then we have another question asking what production and cash flow uplift do you expect from the merged concession over the next 2 to 3 years? And what key risks could delay or reduce those benefits?

Okay. I'll take that. In terms of the cash flow at the start, at first we don't really forecast cash flow, although we do put the CPR out there. So that's a place you can go and do your own calculations, I guess. Similar, I guess, on production as well. In terms of production, the new concession agreement is focused on giving us running room and the opportunity to grow. And I mentioned the -- not just the reserve side, but the continued resources side, which is a significant underlay to that GLJ evaluated CPR. I think in 2 to 3 years -- over the next 2 to 3 years, key risks, obviously, they're geological, but that's mitigated to a large extent by some of the improvement in the runway we have land-wise.

There is the new development leases, which about our small BED concession area, apart from those concession. [indiscernible] North area, too. Plus over [indiscernible], we have with an improved gas price for incremental investments, some additional running room there. So there's a lot of broader, if I say, opportunity there to allow us to mitigate any risk from a geoscience point of view.

Really, the thing that drives our investment is respect we get and we increasingly and continue to get from EGPC, our operating partner in Cairo, there in terms of being paid by EGPC is critical. So we've been very fortunate that we've been prioritized along with others in the IOC space for payments, and that really drives right into this investment we see. So that's what underpins our production.

And we've got just one final question here asking what's the biggest financial risk that investors may be overlooking from Rob?

Yes, Rob, I think that our annual report and the section that we publish on principal risks and uncertainties adequately captures our risk management process. And as always, within the operational jurisdiction of Egypt, receivables collections with us having one customer for our oil and gas is a sort of principal risk.

But given the recent press out of the ministry as well as the minister in the past 48 hours, there's been a real commitment on the part of Egypt to ensure that IOCs are getting paid and continue to get paid. And so we look forward to continuing to invest in this jurisdiction.

That's great, Randy, Eddie, Geoff. Thank you for addressing those questions for investors today. But Randy, before we direct investors to provide you with a feedback, which is particularly important to you and the company, could I please just ask you for a few closing comments?

Well, I think I'll just reiterate, I think the company has done a lot of heavy lifting over the past few years, and I'll spare going through the storybook, but a huge amount of work has been done over the last 3 years to put the company in this position, terrific balance sheet, great working relationships with our partners, not only Cheiron, but also the government and a great future with respect to the contract renegotiation that's taken place over the past 1.5 years.

And so we're now in that position to take advantage in Egypt, and we're just sort of in the beginning to try to as I said, capitalize on our geographic and capabilities in the U.K. North Sea. So we're looking forward to expanding our operations and more to come in future months. Thank you very much for attending.

Perfect. Thank you very much indeed to you all for updating investors today. Could I please ask investors not to close this session as you'll now be automatically redirected to provide your feedback, which will help the company better understand your views and expectations. On behalf of the management team, we would like to thank you for attending today's presentation, and good morning to you all.

Good morning, and welcome to Capricorn's Full Year Results Presentation. I will now hand the call over to CEO, Randy Neely. Please go ahead.

Thank you. Good morning, and thank you all for joining us for Capricorn's 2025 Full Year Results Presentation. I'm Randy Neely, and I'm joined today by our CFO, Eddie Ok; and our COO, Geoff Probert. First, let me take a moment to address the evolving situation in the Middle East, and particularly the conflict involving the U.S., Israel and Iran. We are closely monitoring these developments and our operations in Egypt remain stable and unaffected. It is very much business as usual for us on the ground in Egypt. Now before we dive into the main presentation, I want to briefly address the recent media speculation regarding a potential offer for Capricorn. I understand there may be considerable interest, but due to takeover code, I am unable to provide any specific information beyond what was in the statement earlier this month. To reiterate, Alamadiyaf al-Masiyyah, also known as the Cafani Group, has made multiple unsolicited nonbinding proposals for a potential all-cash offer for Capricorn.

Discussions are ongoing and the Capricorn Board is actively seeking further clarity regarding Cafani's funding arrangements. Under the U.K. Takeover Code, they have until the 8th of April 2026 to make a firm offer. At this stage, there's no certainty that a firm offer will be made nor clarity on the terms of any such offer should one materialize. So let's go to the first slide of the presentation. Now turning to the purpose of today's presentation. 2025 was a significant year operationally, strategically and financially. A lot of progress was made for the company and a number of milestones across our Egyptian operations were met. 2025 marked a pivotal year for the company. I believe we have made the turn from a turnaround story to a serious growth opportunity in the Egypt and hopefully shortly, the U.K. North Sea arenas. Over the past year, accounts receivable outstanding has come down materially, which has allowed a significant reduction in accounts payable as well.

And we've also retired the company's senior debt. We also received the approval of the EGPC Board for the consolidation and amendment of the jointly held production sharing contracts with Cheiron, our operating partner in the Western Desert. We are now only awaiting ratification, and we expect that to occur in the near term. Following the EGPC Board approval, jointly with our partner, we were able to begin increasing our development activities to arrest the production declines. This, combined, of course, with the very solid technical work of our team resulted in our achieving the higher end of our production guidance for 2025. We put this graphic into our materials over a year ago to represent our base intention of where and how we were going to take the company.

Hopefully, our results are showing that we met it. We now have an almost debt-free balance sheet. We have a disciplined and rigorous approach that we operate within and project on to our partner. And to be clear, our partner has been receptive to this and has worked very collaboratively with us over the past year plus to follow a very similar approach. We are now set to take advantage of all the hard work accomplished over these past 3 years of rebuilding Capricorn. In the near term, we will look to build on our base in Egypt, both organically and through acquisitions and also look to capitalize on our geographic location and capabilities in the U.K. North Sea. I'll now turn you over to Eddie, who will walk you through some of our results. Thanks, Randy, and good morning, everyone.

2025 was a solid year as we not only achieved some key structural milestones in the Egypt business, but also really cleaned up our balance sheet. Production was just over 20,000 BOEs on a working interest basis, and we preserved a 40% liquids weighting in that production base. OpEx increased slightly over the prior year at $540 per BOE, driven by our fixed cost base and the currency devaluation from the prior year, having largely worked its way through the system. We're guiding to an OpEx range of $5 to $7 a BOE for '26. The successful capital program in '25 of $77 million invested drove production performance in the year and set a sustainable foundation for 2026's program.

We had material collections in 2025 of $217 million, resulting in us ending the year with an $86 million receivables balance on $81 million in Egypt net cash flow. With only $30 million outstanding on a ring-fenced junior facility and having repaid the senior facility early, we entered '26 with a significantly improved balance sheet. The business ended 2025 with $103 million in cash net of facility debt, which represents a year-over-year cash increase of $80 million, and we continue lobbying efforts with EGPC to return our receivables to a reasonable level.

We are encouraged by the recent press from EGPC and the minister about receivables balances for IOCs and remain confident in the ultimate collection of our outstanding revenues. 2026, the drilling activity completed in '25 and planned '26 activity will shift overall production to a slightly higher liquids weighting at about 43%. Though 2 turnarounds planned for the year will impact full year production estimates as we guide to 18,000 to 22,000 BOEs. Capital of $85 million to $95 million this year will prioritize liquids and ratification will be critical to unlock acreage prospective for additional exploitation and development activity. Next up, Geoff is going to take you through our operational plans for the year.

Thanks, Eddie, and good morning, everyone. Next slide, please. 2025 Egypt operational activity was a year of 2 halves, the first half primarily fulfilling legacy exploration obligations and the second posting the 4 rigs to development drilling. It's worth noting here that without the EGPC agreement to merge our 50-50 concessions and improvements on the payment side, we would not have been able to support much further development drilling there post the first half exploration commitments. So the timing was excellent for all parties. Development drilling was effectively reopened on BED, which supported by the ongoing reservoir management program contributed to improved production performance and a solid year-end exit rate. Legacy exploration in SEH-6 and NUMB and encouragement from Southeast Horus with the latter sufficient to move into the next phase.

Next slide, please. Much of this slide is a reiteration of what we've said on the merged concession before with improvements in concession longevity and fiscal terms catalysts to increase Capricorn's reserves and production, with value and cash flow enhanced to increase investment self-funded from Egypt. Two that I'd like to highlight are, first, the example, $5 per BOE improvement in netbacks at $80 Brent and second, replacement of more than 250% of 2025 production to reserve adds with the merged concession being the major contributor to that. For EGPC, our increase and more importantly, sustained investment delivers great production over the long term for Egypt, having the potential to be a true win-win for all stakeholders. We continue to expect customer ratification in the near future with our investments since mid-2025 consistent with application of the new term.

Next slide. This final operational slide demonstrates the impact of the new merged concession agreement on the reserves and resources underlying the business. We previously highlighted the potential to convert up to 20 million barrels of working interest resources into reserves with the merged concession. We've achieved this as the 27&% reserves placement ratio shows. And we've already identified resource maturation runway for further over 330 million barrels of equivalent unrisked working interest to fee, which 80 million barrels of equivalent has been evaluated by GLJ. With some prospective resources to chase and discussions underway to improve AESW concession these are bonuses. All in all, the new merged concession supported by operational excellence and regular EGPC payments have helped transform the outlook for Capricorn Energy. Thank you for time and attention. Now I'm passing back to Randy to wrap up.

Yes. Thanks, Geoff. Next slide, please. So in closing, I'd like to emphasize that we are now positioned to take advantage of all the hard work undertaken over the past 3 years. We are near debt-free with net cash of over $100 million at the end of 2025, thanks in part to regular and robust collections for our revenues over the past 15 months and in particular, the last 6 months of 2025. We have new terms for the bulk of our concession agreements now just awaiting ratification, which we expect shortly. We have a strong and collaborative working relationship with our JV partner.

Our technical team has identified significant contingent resources for the JV to mature and exploit. We are laser-focused on building cash flow and shareholder value. And our plan is to do that by continuing to employ technical rigor, be focused on costs and details and by seeking out opportunities to expand our operations in Egypt and realizing on our advantaged position in the U.K. North Sea. Thanks, everyone, for attending this morning. We'll now open the floor for questions, but I'll remind you that we will not be able to make any comments on the potential offer for Capricorn as mentioned in the opening.

[Operator Instructions] We'll now take our first question from James Hosie of Shore Capital.

A couple of questions from me. I think, firstly, just looking through your competent persons report you've also published this morning and sort of the 2P production profile that's in there. I was just wondering if you could sort of comment around how confident or how likely you feel it is that you could grow production sort of into 2027 towards the 25,000 barrel a day figure that's in that CPR. And then my second question is really about sort of the balance sheet. And obviously, you're sitting with, I think net cash of $100 million at the end of last year. And just your thoughts around paying down the remaining stub of debt and whether shareholder returns is potentially on the agenda for some point later this year?

Thanks, James. It's Geoff here. I'll take the first part of that question and then let my financial colleagues take the rest. On the 2P in the CPR heading towards 25,000 barrels a day, it really depends on activity levels and, let's say, other things in country. We've got a program at the moment across the BED area. And we also have potential, let's say, of new gas pricing up in Obaiyed, which is very interesting. We announced I think late last year, we had a successful Bahariya well in the BED area to the eastern side of some of these concessions that we have now merged. And we have the new development lease in there as well, which we've pointed to before, plus Sitra North. So there's a lot of running room there for not just the booked reserves and resources, but also some follow-on there beyond that. So I never want to say I guarantee it, but it's the runway towards that is very robust. I'll hand over to some one else for the second question.

Sure. I'll take the question around the balance sheet. Yes, we've got net $100 million in cash and absolutely shareholder returns and our capital allocation policy are front and center for us. But what you got to keep in mind is that we do have capital commitments with the new concession agreements that we do need to spend against. And on top of that, we do have our Egypt operations ring-fenced off from the PLC, which has some contingent liabilities that have been disclosed in our financial statement. So keeping an eye on those potential trailing obligations as well as our current commitments to EGPC and under the new concession agreements, there are considerations going forward, but shareholder returns are certainly top for us.

[Operator Instructions] We have no further questions on the line. I'll now hand over to [indiscernible] for webcast questions.

Thanks, Laura. So first question from Phil at Canaccord. I understand the bonus payments to EGPC on the ratification can effectively be paid out the Capricorn receivables position, but can anniversary payments also be paid in this way as well?

Yes. The short answer is, yes, that's right. That's the way these have always been handled. EGPC owes us. So we owe them for bonus, it's just a deduction from the accounts receivable bonus. That's under the assumption that they -- by the time we get to the following bonuses that they do actually owe us funds, which is pretty normal because every month, we bill them for revenue.

Thank you. Next question is from Dan at Zeus Capital. Can you give us any more color on how the receivables outlook has changed over the last 6 to 9 months? What is behind the improvement here and the increased payments?

Sure, Dan. There's been a consistent narrative out of both the ministry and EGPC that in order to incent IOCs into continuing to invest in the basin, one of the key sort of performance measures that the IOCs look to is to ensure that they are collecting on receivables. And so the consistency and the performance of making sure that those receivables have been paid and are getting caught up is certainly driving our capital program for the coming year and years in the medium term. And certainly, the new concession agreement gives us the commercial incentive to make larger investments in the country as well.

Okay, thank you. There are no further questions from the line. So I'll hand back over to Randy for any closing remarks.

Well, first off, thanks, everyone, for joining us today. Obviously, a lot going on with the company, but I hope that doesn't overshadow the tremendous amount of work that's been done by the company, its employees over the past 3 years to put the company in this position to take advantage of that work, which hopefully shortly will be concluded with the ratification and onward and upward with growth. Thanks again, and we'll see you soon.

Ladies and gentlemen, this concludes today's call. Thank you for your participation. You may now disconnect.

Good morning, and thank you for attending our midyear 2025 results call. I am joined today by Eddie Ok, our CFO, who will walk through the financial and operations highlights as well as Geoff Probert, our COO, who will provide a review of ongoing operations and provide more detail on the progress made to improve our production sharing contracts in Egypt. In addition, Nathan Piper, Director of Commercial, is also available for the Q&A session.

Since myself, the new management team, Geoff, Eddie, Nathan and our entire Board joined the company beginning in 2023, we've made it very clear what our goals were. We intended to improve upon the base business in Egypt, reduce overhead and scale down or eliminate all nonviable activities of the company. To do that, we set out with our JV partner in Egypt, Cheiron to negotiate a new consolidated production sharing contract for the 50-50 jointly held contracts. That has been a major undertaking, and we announced earlier this year that we had achieved a major milestone with the government approval of those terms. Geoff will provide more detail on this process and outcome shortly.

For those of you that perhaps have not been paying attention to our journey over the past 2 years, I'll remind you that we have exited all noncore activities, and we reduced our G&A burden by approximately 80%, including our staffing contingent, effectively rightsized the organization. As well, the company returned over $600 million to investors through dividends and share buybacks. Operationally, we have worked very hard to achieve technical alignment with our partner in Egypt, and we are very pleased with how that has progressed. Today, I can confidently state that Capricorn and Cheiron are working synergistically to improve the technical and financial results of the joint venture.

When this team, Capricorn 2.0 joined, we all recognized that the company needed to instill financial discipline, which included a measured approach to funding investments in Egypt, effectively a self-funding model. Although with the improved fiscal terms and payment schedules, this approach may not appear as relevant today as it was 2 years ago. We do not intend to deviate from this mindset.

With our initial goals principally achieved, we are turning our attention to increasing value for our shareholders. Our intent is to do that through 3 principal activities: First, realizing on the improvement of the base business in Egypt. The improvements to fiscal terms and lengthening of contract life will open up significantly new resource for the joint venture to pursue and exploit.

Effectively, the amended contractual terms will allow the joint venture to pursue a very large existing resource base to have both reserves and production. Second, we, led by Nathan, our Director of Commercial, will continue to search for opportunities in the U.K. North Sea to realize on our historic position there. We have a strict set of criteria we measure every North Sea opportunity against. And although we have been deep into several processes, we have been unable to successfully conclude any of them. That's been either due to being outbid or the seller just effectively electing to retain the asset.

And the third activity that we'll look to add value is looking for synergistic asset deals or business to add to the portfolio. Ultimately, all of these will lead the company to return value to the shareholders.

Building business of scale and longevity. Over the past 2 years, the new Board, myself and the rest of the team have made a major effort to transform the culture, priorities and focus of Capricorn. This wheel is meant to capture very simply how we are approaching this.

We focus on the small details. We finance the business and any new ventures conservatively. We approach every project with technical rigor and apply strict capital discipline and demand the same of our partners. We approach the business strictly through a self-funding business model and new ventures initiated will require the application of a prudent approach to risk management.

I'll let Geoff take the next slide.

Thanks, Randy, and good morning. You can see here on the graphic that we're on the last step of our journey to completing the consolidation of our 8, 50-50 concession agreements into a single extended and improved agreement. Improvements in concession longevity and fiscal terms are a catalyst to increase Capricorn's reserves and production with value and cash flow enhanced by increased investment self-funded from Egypt.

For EGPC, this increased and more importantly, sustained investment delivers great production over the long-term for Egypt, and has potential to be a true win-win for all stakeholders. We continue to expect custom ratification in the near future, commencing investment consistent with the new terms in the second half of 2025 and expect new terms and commitments to apply to that investment.

Back to you, Randy.

Thanks, Geoff. Now with many of our primary objectives having been achieved, our primary focus for myself and as well as Nathan is to get investors to recognize this value improvement. On the back of an envelope, you can see that we have a base business in Egypt that fully supports our market value. Note that our debt in Egypt has been paid down materially over this year and will continue to be paid down over the coming year.

On top of that, we have the cash that resides in the parent company, a value improvement that will be realized upon ratification of our Egyptian-based business and the value that can be realized by future investment in the U.K. North Sea. All of these combined leave us with a near-term potential of doubling our share value, and that's before we expand our operations either in Egypt or elsewhere.

I'll now turn the presentation over to Eddie Ok, our CFO, to provide a review of the financial and operating highlights.

Thanks, Randy, and good morning, all. Production through the first half was in line with projections, and we continue to guide towards the midpoint of our published range of 17,000 to 21,000 BOE per day. Our focus on higher-margin drilling continues to perform as liquids remain slightly above forecast at 43% of production. OpEx is continuing to trend upwards as the currency devaluation impact from last year works its way through our cost structure.

This is being exacerbated by declining production against a large fixed cost base, but we continue to work with the operator to ensure that costs are being controlled to the greatest extent possible. We slightly reduced our capital guidance as scheduling is going to push back some current year activity into the following year, but we remain on track to deliver the bulk of our development drilling in the second half.

Next slide, please. As can be seen from our cash waterfall, the contingent consideration collected in the half has offset the slow pace of collections from EGPC. In the second half to date, collections have improved, and we're anticipating the collection of at least $90 million in the second half, which will help offset scheduled repayments of our outstanding debt.

Up next, Goeff is going to take you through an operational overview of the remainder of the year.

Thanks, Eddie. I'm going to very briefly highlight our first half 2025 Egypt operational focus, give a snapshot of where we expect to invest in '26 and look at our reserves and resources are trending, particularly in the context of the new agreement.

This map shows our focus on liquids development and production, particularly in the BED, Abu Roash G reservoir area, and that was all in the first half of 2025. While new agreement has been finalized, we also drilled 3 wells to fulfill our legacy commitments on the 3 pure exploration concessions acquired as part of the Egypt acquisition in 2021.

Those exploration commitments are now satisfied with a minor on spend of $750,000 on NUMB. Our joint venture with Cheiron, the operator has elected to further evaluate commerciality of 2 of these wells, and we expect those results later this month. You can also see here that the hatched areas indicated concessions that we expect to form the new consolidation agreements closely the prime contiguous land added for further development and exploration on trend.

Next slide. This slide illustrates our expected 4 rig development drilling schedule, 4 rigs to reflect improved agreement terms encouraging us to invest in a longer list of economic wells. Alongside optimization of development well sequence, we continue to work with our JV partner Cheiron to also prioritize non-rig production generation, reinstating shutting wells, identifying additional perforation opportunities on bypass pay.

Next slide. This last slide on reserves encapsulates the rationale behind Capricorn negotiating an extended and improved integrated concession agreement on our 50-50 concessions. We expect our ability to replace reserves and extend their life to be materially improved by the extended concession period and improved concession economic terms.

We also expect the concession improvement will also impact our risk appetite to chase near-field exploration potential on our newly extended land and our existing land and to develop and mature our portfolio of resources. Capricorn has been working with opportunity hopper on the 50-50 new concession agreement acreage, not just near-term development options, but also contingent and prospective resources.

We expect this work will help to underpin future reserve and resource bookings and may also direct and prioritize productive drilling activity. You can see here that internally, we've identified a working interest around 350 million barrels of oil equivalent unrisked best estimate contingent resources to mature. Near-term license extensions resulting from an approved integrated concession potentially support the early conversion of up to a working interest nearly 20 million barrels oil equivalent to reserves, with further reclassifications anticipated, all underpinned by 5-year investment plans. Once approved, we expect to rapidly move to drill wells to exploit those reserves additions.

Thanks for your time and attention. Now I'm passing over to Randy to wrap up.

Yes. Thanks, Goeff. I trust that those of you that have been following the Capricorn story since this team took over will agree that we have had a strong record of delivering on company objectives. To summarize, we set out to improve the Egyptian business by making it both long-term sustainable and a platform for growth. We are very near the confirmation of that objective with ratification occurring in the near future.

The new PSC will provide a catalyst for increases in reserves for investment and value improvements. Additionally, we are seeing and hearing reasons to be optimistic about the future reduction of our outstanding receivables and a more stable, consistent payment plan from EGPC. And while we have been slower than we hoped to be to deliver or realize an embedded value for us to reinvest in the U.K. North Sea, we remain steadfast in our goal to achieve this objective.

Beyond our current operations in Egypt and our near-term goal of expansion in the U.K. North Sea, we are actively looking for synergistic opportunities in the areas of our capabilities and credibility that we have in Capricorn and our team.

Well, that's it for our formal presentation. Thank you very much for dialing in, and we'll now take questions from analysts online.

[Operator Instructions] We now take our first question from James Hosie of Shore Capital.

A couple of questions for you. Just firstly, on the improved trade receivable position and the payment plan. You've already received $37 million since the midyear and the release mentioned today a $50 million payment being due in October. Just wondering if it's reasonable to think that Capricorn is on track to collect more in H2 than the minimum $90 million you referred to.

And then second question is just wondering about the updated competent persons report you plan to publish once the new concession term is ratified. Should we expect that to include revised 2P production and CapEx profile? Are you simply just going to apply the assumptions you used in July CPR to the new concession terms?

I'll take the AR question. Yes, you're right. We've received $37 million to date, and we're expecting a $50 million bullet here in the near term. We're remaining conservative about our collections assumptions. But yes, if all goes according to plan, we should be collecting in excess of that with a material reduction in our receivables possible by the end of the year.

And Goeff here, I'll pick up the other question, James, on CPR revision. When we issue that CPR, yes, it will be the midyear actually to understand. It will include revised CapEx profile deductions for production. It will be a full update.

And we'll now move on to our next question from Chris Wheaton of Stifel.

A question for me also on working capital, but trying to look forward a bit further. What provisions in the license renegotiation has there been for working capital recovery? Because my concern when you start drilling and exploiting some of that upside resource potential is, you've got to start really putting CapEx in the ground first, then your production goes up, then you get the cash flow. Well, then you actually sell the oil, then at some point in the future, you get the cash flow. So there could be quite a significant working capital burn at least to start with unless Egypt are prompted in paying those receivables back because with the higher CapEx as well as the higher OpEx, then your receivables amount is going to start building quite quickly unless you get those regular repayments.

Could you talk about how you've tried to mitigate those risks in the license renegotiation? And secondly, what that means for potential timing of dividend payouts because I still see your priorities as being first pay down -- first, you've got to keep investing in the drilling. Secondly, you've got to pay down the debt remaining in Egypt and then possibly shareholders could start to get some more cash back. So I'm interested in that implication for your future dividend payments.

Chris, I'll take that. Yes. So we've got obviously a material investment sort of obligation opportunity in Egypt as a result of the modernized concession agreement and one that we're happy to deliver on given the economic return that's represented by that investment.

Just keep in mind, we're still producing 20,000 barrels of oil equivalent per day in Egypt with the corresponding build in cost pools, profit oil, profit gas as well as our existing receivables position. And as you folks have seen historically, we're managing the business quite carefully with respect to invested dollars against realized dollars out. And so that philosophy is not going to change going forward.

Part of the overriding imperative on this deal has to be that our shareholders realize a return. Now based off of historical decisions, historical investments, we've got a fairly really weighted debt burden hanging over this asset base. But we plan on honoring those debt commitments with repayments of that debt coming up over the next couple of years as well as delivering on these capital investments.

And to your point, yes, after that, and as always, our overriding concern is going to be on shareholder value and how do we deliver that value in the asset base to the shareholders over time.

Jack, I may just add one thing. That is the -- background to negotiations create, let's say, a more investable concession agreement and bond agreements and that creates relevance. I mean the whole purpose is not just to create value for the shareholders also to get paid. By improving the terms, we have an investable set of concessions where before, frankly, that it was a pretty weak place to be. Each we pays those who have the capacity to invest. And by that, I mean the places they can invest economically.

So it's a bit of a symbiotic outcome for both we invest, we get great production, we get paid so that we can invest and we generate returns. They do accept that part of it. In terms of the overall commitments we have to make in terms of investment, the terms are -- if you look at our historical investment profile in Egypt on a working interest basis, they're quite modest. It's spread over a number of years -- if there happens to be a short-term problem around payments for a while, we can just dial back investments, while that happens and dial those investments back up again in the future. So we're pretty confident that this structure and the new concession agreement will generate the right opportunities for us to invest and be paid at the same time.

Okay. Just to be clear, the concession doesn't include -- the revised concession agreement doesn't include a sort of contractual basis for this is how receivables will be paid and this is sort of [indiscernible]...

Yes. I'll take it. Yes. So Chris, that's in there already. Like, those terms are in the existing contracts. So...

Right. They are totally fine.

Yes. What the situation is Egypt sometimes struggles to keep up payments just because of their own fiscal issues and where they're prioritized. But we're seeing -- we're seeing that mindset change. And that's because Egypt is short energy and they've struggled to sort of keep the production moving in the right direction given the local demand. And so that's what we're seeing change over the past 18, 24 months as they're moving into more reprioritizing IOC payments in order to at least maintain production rather than things slip off or go to other jurisdictions.

Thank you. We have no further questions in the queue. I'll now hand over for webcast questions.

So we've got a few questions from Charlie Sharp at Canaccord. First question, what liquid proportion of total production would you expect to be able to achieve over the next 6 to 18 months?

So actually, I didn't quite hear that.

What liquid portion of total production would you expect to be able to achieve over the next 6 to 18 months?

I don't anticipate a significant change in the overall proportion. We recorded rather a 42%, 43% liquids in the last half, and we anticipate that continuing going forward. It might now just a little bit, but it's not going to increase significantly in the next 6 months.

Next question from Charlie. What sort of test results on the 2 exploration wells would support commerciality and what would the next operational steps to be?

So obviously, the rate and sustainability, so the pressure drop if there is the reservoir during the testing phase there are -- as is often the case in these Western Desert reservoirs or wells, there are multiple potential pay zones. We have to look at productivity, we have to look at sustainability. And we have to look at the distance to the nearest infrastructure. These wells are reasonably close to nearby infrastructure, but that doesn't make them seldom. So yes, that's pretty much how we look at the wells.

In terms of the next steps, we take the data, we will evaluate it and with our partner, the operator Cheiron, we'll make a proposal if we see economic value to do so to complete and hook up those wells into nearby production facilities.

Great. And final question, can you provide some guidance on expected year-end 2025 receivables?

Sure. It's in the release. If you take a look at what our historic production is and the forecast going forward against what our projected collections are that you should be able to back into that number pretty quickly. And like I said, it's going to be a conservative estimate for the year-end, but that's what we're guiding towards.

No further questions from the webcast. So I'll hand over to you for any closing remarks.

Thanks, Kelly. I just want to say thanks, everyone, for dialing in or listening in, afterwards, and we look forward to speaking to many of you live over the coming weeks. Have a great day.