REG - Scirocco Energy PLC - Corporate Update

Scirocco EnergyAnnouncement

25/05/2023 07:00

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RNS Number : 5790A  Scirocco Energy PLC  25 May 2023

25 May 2023

Scirocco Energy plc

("Scirocco" or the "Company")

Corporate Update

Scirocco Energy (AIM: SCIR), the AIM investing company targeting
attractive assets within the European sustainable energy and circular economy
markets, provides the following update on the divestment of the Ruvuma asset,
alongside an update regarding its EAG Joint Venture.

Ruvuma Asset Divestment

Scirocco and ARA Petroleum Tanzania (APT) have executed amendments to extend
the longstop date of the proposed transaction from 30 June 2023 to 31 August
2023. Although Scirocco has continued to make progress with the Tanzanian
Revenue Authority ("TRA") regarding obtaining tax clearance for the divestment
of Ruvuma, Scirocco and its counterparty agreed it was prudent to extend the
longstop date given this process is taking longer than expected.  Based on
dialogue with local authorities to date, the Board is confident of achieving
completion of the divestment within this extended timeline, though
Shareholders should be aware, as previously announced, that completion cannot
be guaranteed.

Ruvuma Asset Recent Developments

As previously disclosed by Scirocco, the operator, APT, is continuing to
engage with Tanzanian authorities to finalise gas sales arrangements and the
award of the development licence for Ruvuma. This has the potential to
accelerate an earlier development of commercial gas sales from Ruvuma than
initially envisaged by Scirocco which would trigger earlier pay out of the
contingent elements of consideration under the asset sale arrangements.

In addition to the expected gross completion proceeds of $2.5 million, the
accelerated development process has the potential to trigger the FID
contingent payment of $3 million within Q3 of 2023 as the JV moves ahead with
the programme, if approved.

EAG Investment Update

Operational and financial performance at Greenan Generation Limited ("GGL")
remains on a positive trend, and Scirocco looks forward to providing a
detailed update following the end of Q2. The delay to the Ruvuma transaction
has unfortunately undermined Scirocco's ability to support further
acquisitions with EAG at the current time. As a result, the previously
announced planned acquisition opportunity for an anaerobic digestion plant in
Southwest England will not proceed at this time, though may be resurrected.

To ensure funding for future acquisition opportunities, and as previously
disclosed by Scirocco, the Company has agreed that EAG should be able to
explore alternative investment sources that can be accessed alongside or in
addition to Scirocco's own investment.

EAG continues to screen a number of opportunities within its business
development pipeline.

Commenting on the update, Tom Reynolds, CEO of Scirocco, said:

"We're pleased to have amended the long-stop date to allow additional time for
completion of the divestment of our interest in the Ruvuma Asset.  While the
process has taken longer than originally envisaged, we are encouraged by our
dialogue with the relevant authorities in Tanzania and believe we are on track
to complete within this new timeframe.

Operational progress at Ruvuma points to the potential for an acceleration of
the contingent elements of the gross consideration which would be
transformational for Scirocco's balance sheet, albeit not guaranteed.  Until
completion, cash preservation remains a core priority for the team and we have
taken proactive measures to reduce G&A and safeguard the Company's
existing cash reserves.

As a result of the delays to completion of Ruvuma, it is regrettable that we
cannot support further acquisitions by EAG at this time.  EAG continues to
assess a compelling pipeline of opportunities consistent with its growth
strategy and our expectations of a much enhanced financial position within
Scirocco later this year provides confidence that we can support EAG to
execute value accretive deals in the second half of this year."

 

For further information:

 Scirocco Energy plc                            +44 (0) 20 7466 5000

 Tom Reynolds, CEO

 Doug Rycroft, COO

 Strand Hanson Limited, Nominated Adviser       +44 (0) 20 7409 3494

 Ritchie Balmer / James Spinney / Rory Murphy

 WH Ireland Limited, Broker                     +44 (0) 207 220 1666

 Harry Ansell / Katy Mitchell

 Buchanan, Financial PR                         +44 (0) 20 7466 5000

 Ben Romney / Jon Krinks / George Pope

 

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