• Newtyn Partners and Palliser Capital are recording strong returns from Capricorn Energy's Egypt operations as production hits guidance.

• A tax dispute over Senegal's Sangomar project, involving CFA 41bn claimed by local authorities, continues to delay anticipated cash flows.

• Both US and UK activist investors monitor the Senegal arbitration closely, while Egypt remains their primary source of returns from Capricorn.

US and UK activist investors Newtyn Partners and Palliser Capital are benefiting from Capricorn Energy's operational and financial performance in Egypt, while unresolved matters in Senegal continue to affect part of the expected proceeds from the company's earlier divestment in the country.

Capricorn Energy's full-year 2025 results reflect a year of solid operational delivery and improved financial positioning, driven by its Egyptian assets. The company reported production of 20,024 barrels of oil equivalent per day (boepd), at the upper end of its guidance range, supported by development drilling and enhanced recovery programmes in the Badr El Din (BED) concession. Revenues reached $134 million, with net cash inflows from Egyptian operations of $81 million after capital expenditure.

A significant development during the period was the approval of a merged concession agreement in Egypt, consolidating eight existing licenses into a single framework. This restructuring is expected to generate additional value through improved fiscal terms, expanded acreage, and a 20.2 million boe increase in 2P reserves. At an oil price of $80 per barrel, Capricorn estimates a material improvement in its netback, reinforcing the cash-generative profile of its Egyptian portfolio.

For 2026, the company expects to produce between 18,000 and 22,000 barrels of oil equivalent per day. It plans to invest between $85 million and $95 million. Its strategy focuses on maintaining disciplined spending in Egypt, while selectively expanding into the North Sea and other countries in the Middle East and North Africa.

Newtyn Partners and Palliser Capital are both significant shareholders in Capricorn Energy. As of early 2026, Newtyn holds approximately 14.3% of voting rights, while Palliser holds around 13.8%, together representing a substantial combined stake. Both funds have been active in shaping the company's strategic direction over the past three years, opposing major merger proposals — including with Tullow Oil in 2022 and NewMed Energy in 2023 — on the grounds that such transactions undervalued the company. In their place, both investors have advocated for a capital discipline model prioritising cash generation and direct shareholder returns through dividends and buybacks.

This approach has also shaped Capricorn's asset portfolio. In 2020–2021, the company — then operating as Cairn Energy — divested its 40% stake in the Sangomar oil project in Senegal to Australia's Woodside Energy. The transaction included an upfront payment of $300 million, along with contingent payments tied to oil prices and production milestones. A $50 million tranche was triggered by first oil at Sangomar in mid-2024.

However, an outstanding tax dispute in Senegal has introduced uncertainty into the final settlement of proceeds. Senegalese tax authorities have claimed approximately CFA 41 billion (around $72.15 million) in connection with the original transaction. Woodside has contested this assessment and initiated international arbitration proceedings in 2025. Under the terms of the sale agreement, Capricorn may bear a portion of any resulting tax liabilities, creating a contingent risk for shareholders.

Newtyn and Palliser continue to monitor the situation closely, with a view to limiting any erosion of value from the Senegal divestment. In the interim, Egypt remains the primary source of value for the company. Stable production, improved fiscal terms, and consistent cash generation from Egyptian operations are aligned with the investment strategy advocated by both shareholders, and provide measurable returns while the Senegal matter awaits legal resolution.

Cynthia Ebot Takang, Edited by Idriss Linge