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-Massiyah] , also known as the [Cafani Group], has made multiple unsolicited non-binding 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 8 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. 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 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 eight 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 gonna 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 onto our partner. 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 three 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'll 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 $5.40/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-$7/BOE for 2026. The successful capital program in 2025 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-fence junior facility and having repaid the senior facility early, we enter 2026 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 2025 and planned 2026 activity will shift overall production to a slightly higher liquids weighting.
At about 43%, though two turnarounds planned for the year will impact full year production estimates as we guide to 18,000-22,000 BOEs. Capital of $85 million-$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 gonna 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 two halves, with the first half primarily fulfilling legacy exploration obligations, and the second pivoting the four 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. 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 led to success at NUMB and encouragement in South East 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 concessional longevity and fiscal terms, catalysts to increase Capricorn's reserves and production, we value in cash flow enhanced through increased investment, self-funded from Egypt. Two bullets I'd like to highlight are, first, the example, approximately $5 per barrel proven in netbacks at $80 Brent. Second, replacement of more than 200% of 2025 production through reserve adds, with the merged concession being a major contributor to that. For EGPC, our increase in, 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 contract ratification in the near future, with our investments since mid-2025 consistent with application of the new terms. 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 working interest resources into reserves with the merged concession. We've achieved this as the 277% reserve replacement ratio shows. We've already identified a resource maturation runway for further over 330 million barrels of oil equivalent unrisked working interest 2C, which 80 million barrels of oil equivalent has been evaluated by GLJ. With some prospective resources to chase and discussions underway to improve ASW concession, these are bonuses. 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. Now I'm passing back to Randy to wrap up.
Yeah, thanks, Geoff. Next slide, please. In closing, I would like to emphasize that we are now positioned to take advantage of all the hard work undertaken over the past three 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 six months of 2025. We have new terms to 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.
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 advantage 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.
Thank you. Ladies and gentlemen, if you would like to ask a question, please press star one on your telephone keypad. We will pause for a brief moment. Thank you. We'll now take our first question from James Hosie of Shore Capital. Please go ahead. Your line is open.
Hi. Good morning. A couple of questions from me. I think firstly, just looking through your competent person's 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. Then my second question is really about sort of the balance sheet. Obviously, you're sitting with net cash flow of $100 million at the end of last year. 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 upon 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, particularly under the 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. We have the new development lease in there as well, which we've pointed to before, plus the Sitra North.
There's a lot of running room there for not just the booked reserves and resources, but also some follow on there beyond that. You know, I never wanna say I guarantee it, but it's the runway towards that is very robust. I'll hand over to somebody on the second question.
Sure. I'll take the question around the balance sheet. Yeah, we've got a net $100 million in cash, and absolutely, shareholder returns and our capital allocation policy are front and center for us. What you've 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. Keeping an eye on those potential trailing obligations as well as our current commitments to EGPC and under the new concession agreements, they're all gonna be considerations going forward. Shareholder returns are certainly top of the list for us.
Okay. Thanks for your answers.
Thank you. Once again, as a reminder, if you would like to ask a question, please press star one on your telephone keypad, and we'll pause for a further moment. We have no further questions on the line. I'll now hand over to Pilar for webcast questions.
Thanks, Laura. First question from Phil at Canaccord. I understand the bonus payments to EGPC on ratification can effectively be paid out of the Capricorn receivables position, but can anniversary payments also be paid in this way as well?
Yeah. The short answer is, yeah, that's right. That's the way these have always been handled. I mean, EGPC owes us, so if we owe them for a 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 'cause 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 six-nine 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. The consistency in 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. Certainly, the new concession agreement gives us the commercial incentive to make larger investments in the country as well.
Great. Thank you. There are no further questions, from online, 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 and its employees over the past three 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.