Capricorn Energy PLC on Thursday said it will pursue its combination with Israeli energy limited partnership NewMed Energy to ‘create a world-class gas and energy champion’, while it voiced disagreements with its shareholder Palliser Capital UK.
The Edinburgh, Scotland-based upstream energy company said it expected the combination with NewMed to provide a cash return of around $620 million, of which more than $120 million could be returned to shareholders in the near-term.
It said it will provide enhanced scale, liquidity and a superior investment case and benefit strategically from both energy security and energy transition trends.
This is alongside providing resilient downside commodity price protection, whilst retaining upside exposure, together with low operating costs and minimum maintenance capital expenditure.
Capricorn Energy said the combination will target a doubling of production from development projects within the existing portfolio by 2030, alongside ‘offer[ing] an enhanced environmental social and governance profile with the scale and resources necessary to accelerate our commitment to achieving net zero scope 1 and 2 carbon emissions by 2040 across the combined portfolio’.
Meanwhile, it also voiced disagreements with shareholder Palliser about its combination with NewMed, particularly over Palliser’s request to convene a shareholders meeting to remove seven directors from the Capricorn Energy board and appoint six new Palliser-proposed candidates.
Capricorn Energy said it met with Palliser 11 times as part of its shareholder engagements.
‘We share their stated commitment to maximising shareholder value, and it was in that spirit that we met with the Palliser team,’ it said.
However, it labelled Palliser’s alternative plan for future value creation to be ‘based on an overstated value of Capricorn on a standalone basis’, due to a reliance on ‘several outdated and incorrect facts and assumptions’.
This includes Palliser’s claim it will be able to immediately return $620 million to shareholders from the combination, valuing the contingent value rights at over $300 million and underestimating costs, challenges and timelines.
‘We urge Capricorn shareholders to carefully review these materials. We have real concerns that shareholders who rely on the [Palliser] plan, without understanding the material risks and errors in its analysis, will likely be voting for value destruction,’ Capricorn Energy said.
On November 28, Palliser bought a 6.9% stake in Capricorn Energy.
Shares in Capricorn Energy were up 0.3% to 245.72 pence each in London on Thursday morning.
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