UK-listed independent Capricorn Energy has reported operational growth at its core producing assets in Egypt as it prepares for a buy-back of shares.

Following its acquisition of oil and gas assets in Egypt’s Western Desert hotspot last year, Capricorn (formerly known as Cairn Energy) reported production growth was “ahead of expectations”. Production averaged 36,300 barrels of oil equivalent per day net.

Production from the Egyptian assets increased almost 8% from completion of the acquisition to the end of December, the company said in an operational and trading update.

“We are very encouraged by the initial operating performance of our newly acquired Western Desert assets in Egypt, with production growth ahead of expectations. We look forward to accelerating cash flows from the assets whilst reducing their emissions profile,” said chief executive Simon Thomson.

Capricorn expects net production to remain stable between 37,000 boepd and 43,000 boepd, with oil and condensate comprising 35% to 40% of this.

To build for more growth, it has earmarked development capital investments of $200 million for 2022, of which about half will be spent on development drilling in Egypt, where up to 40 wells are planned, the company reported.

Egypt has been luring increased oil and gas investments in recent months, and the under-explored Western Desert is one of the hotspots, with US supermajors such as Chevron and ExxonMobil at the fore.

In a recent Egyptian licensing round eight licences covering a total of 12,300 square kilometres were awarded to Eni , BP, Houston-based Apex International, London-listed Energean, Hungary-based INA Nafta, Enap Sipetrol of Chile and China's United Energy Group.

Capricorn is also looking for upstream growth elsewhere. A further $40 million was allocated for two exploration wells in the North Sea and between $30 million and $35 million for other international exploration, mainly in Mexico, according to a research note by investment and wealth management brokerage Stifel.

Although Capricorn raised $181 million of new debt last year to fund its Egypt acquisitions, it still ended 2021 with net cash of $133 million in hand.

Besides major exploration investment, Capricorn said it is firming plans to buy back shares this year in response to a long-awaited payment of 79 billion rupees ($1.06 billion) from the government of India under an international arbitration award.

Some $700 million of this total will be returned through two buyback operations, one for $500 million in which shareholders will be invited to tender some or all of their shareholding for purchase.

A further $200 million will be returned through a share repurchase programme.

With a market capitalisation of about $1.34 billion, the two proposed buybacks could remove about half of the Capricorn shares in circulation at current prices.

According to the company, three US investment houses, MFS Investment Management, BlackRock and Vanguard, together share a combined stake of more than 28% in Capricorn, with UK investment company Abrdn holding almost 5%.