REG - Scirocco Energy PLC - Interim Results
29/09/2023 07:00
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RNS Number : 0831O Scirocco Energy PLC 29 September 2023
29 September 2023
Scirocco Energy plc
("Scirocco" or "the Company")
Interim Results
Scirocco Energy plc (AIM: SCIR), the AIM investing company targeting
attractive assets within the European sustainable energy and circular economy
markets, is pleased to announce its unaudited interim results for the six
months ended 30 June 2023.
Period Highlights:
· In line with the Investing Policy approved at AGM in July 2021, the
Company continued to support Energy Acquisitions Group Limited ("EAG"), where
Scirocco has a 50% ownership interest, to identify additional investment
opportunities building on the acquisition by EAG of 100% of Greenan Generation
Limited ("GGL") and associated 0.5 MWe Anaerobic Digestion ("AD") plant
located in County Londonderry, Northern Ireland. AD is a process that creates
biogas, a renewable energy source that will help the UK deliver on its
decarbonization commitments
· During the period, GGL has seen lower average wholesale power prices
than the same period in 2022 and experienced reduced operational uptime driven
by an intermittent fault. These effects were partially offset by higher ROC
payments linked to inflation adjustments
• Revenue for H1 2023 was £574k compared to £544k for the same
period in 2022, an increase of 5.5% year on year.
• EBITDA for H1 2023 was £151k compared to £202k for the same
period in 2022 reflecting lower average wholesale prices and operational
interruptions and a general increase to the plant service and feedstock
contracts.
· The Company continued to engage with Tanzanian government authorities
to progress the completion of the divestment of its 25% working interest in
the Ruvuma asset following the agreement with ARA Petroleum Tanzania announced
on 31(st) August 2022. The total consideration for the sale is up to $16
million:
• Initial consideration of US$3 million payable on completion of the
sale, which is expected during October 2023;
• US$3 million payable upon final investment decision being taken by
the parties to the Ruvuma Asset Production Sharing Agreement or the JOA as the
case may be, which given progress made to date at the asset is expected to be
received by year end 2023;
• Deferred consideration of up to US$8 million payable in the form
of a 25% net revenue share from the point when Ruvuma commences delivery of
gas to the gas buyer;
• Contingent consideration of US$2 million payable on gross
production reaching a level equal to or greater than 50Bcf.
· The Company announced on 2 March 2023 that significant progress had
been achieved by the operator APT to deliver first gas from the Ruvuma field
by the end of 2023;
· The approval process has taken longer than originally anticipated and
the Company announced on 25 May 2023 that it had agreed with its counterparty
APT to extend the longstop date to 31 August 2023 to provide additional time
to achieve the necessary government consents;
· The Prolific Basins financing facility outstanding balance was
settled in full during the period through cash instalments paid in connection
with the Amendment and Repayment plan announced on 11 October 2022. The
facility is now fully repaid;
· The Company disposed of part of its remaining shareholding in Helium
One realizing c. £142k in proceeds during the period;
· As part of an ongoing focus on ensuring that the Company has the
correct board composition to support the implementation of the investment
policy Muir Miller and Don Nicolson submitted their notice to step down from
the board and Niall Roberts, a candidate recommended by the Company's largest
shareholder GP Jersey was appointed to the board on 1(st) March 2023 and Matt
Bower, GP Jersey's appointed representative, was appointed to the board on
27(th) April 2023;
· Continued the Company's focus on cost discipline and cash
preservation in order to deliver completion of Ruvuma; and
· Held cash at 30 June 2023 of £295k
Post Period Highlights:
· On 12 July 2023 the Company provided an operational update regarding
the Ruvuma asset noting the significant progress made by the JV in the
development of the Ruvuma license which provides improved clarity regarding
the timing of contingent payments under the sale arrangements between ARA
Petroleum Tanzania and Scirocco.
· On 3 August 2023, The Company announced that it had received the tax
clearance certificate relating to the Ruvuma transaction from the Tanzanian
Revenue Authority.
· The company successfully recovered 1 million Helium One shares which
had been "trapped" after Pello Capital entered administration in October 2022.
These shares were sold during August 2023 delivering net proceeds of c. £75k.
· On 29 August 2023, the Company announced that whilst significant
progress had been made delivering the necessary approvals from the relevant
Tanzanian government authorities it had agreed with its counterparty APT to
extend the longstop for the Ruvuma transaction to 30 September 2023 to allow
sufficient time to achieve the final approval from the Minster of Energy.
· On 28 September 2023, the Company announced that whilst it was
actively engaged with Tanzanian government authorities including the Ministry
of Energy to deliver the necessary approvals required to complete the
transaction, it had agreed with its counterparty APT to extend the longstop
for the Ruvuma transaction to 20 October 2023 to allow sufficient time to
achieve the final approval from the Minister of Energy.
Commenting on the Interim Results, Alastair Ferguson, Non-Executive Chairman
said:
The first half of 2023 has seen the Company continue to focus on selling its
legacy natural resources assets to provide capital to invest within target
assets in the European sustainable energy and circular economy markets.
Although the sale of its legacy interest in Ruvuma has taken longer than
originally anticipated to complete, we are now focused on delivering
completion. The proceeds of the divestment - both at completion and any future
contingent payments - will be available for reinvestment in assets which
comply with the company's investment policy.
With the imminent completion of the Ruvuma sale, the company is expected to
accrue cash resources over the coming months supporting new investment
activities.
We now look forward to engaging with stakeholders to deliver the investment
plan going forward."
The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the Market Abuse Regulations
(EU) No. 596/2014 ("MAR").
For further information:
Scirocco Energy plc +44 (0) 20 7466 5000
Tom Reynolds, CEO
Strand Hanson Limited, Nominated Adviser +44 (0) 20 7409 3494
Ritchie Balmer / James Spinney / Robert Collins
WH Ireland Limited, Broker +44 (0) 207 220 1666
Harry Ansell / Katy Mitchell
Buchanan, Financial PR +44 (0) 20 7466 5000
Ben Romney / Barry Archer / George Pope
Chairman's statement
Introduction
I am pleased to be providing this statement in my capacity as Non-Executive
Chairman of Scirocco. At the end of 2022, the Company had navigated a
challenging year where it secured an agreement to sell its principle legacy
asset - Ruvuma - and engaged with stakeholders about the implications of this
linked to its new investment policy. The terms of that agreement resulted in a
firm consideration for Scirocco, with contingent elements taking the total
consideration up to a potential $16m of proceeds. This was a transformative
event for the Company, realizing value from a legacy investment that no longer
fit within Scirocco's agreed investment policy, and providing cash that could
be deployed into low-risk, cash generative opportunities in line with the
stated strategy.
Since then the Company has been focused on delivering the completion of the
Ruvuma divestment and also tidying up legacy issues such as the repayment of
the Prolific Basins facility, the recovery and sale of its remaining shares in
Helium One and evolution of the composition of the board.
With the imminent completion of Ruvuma the Company now expects to accrue cash
over the coming months as a result of contingent payments linked to progress
of the development of Ruvuma towards first gas - transforming the balance
sheet and providing liquidity to deliver the Company's long-term growth
objectives.
As I have said previously, the Board is committed to grow value for all
shareholders by the most appropriate investment of Company resources on a risk
adjusted basis. With the completion of Ruvuma I look forward to engaging with
shareholders to agree and progress towards this objective, ensuring
stakeholder alignment as we embark on the next chapter of the Company's story.
Strategy and Business Development
With the progress made in divesting legacy assets the Board restates
Scirocco's objective to build a portfolio of cash generative assets within the
following three core areas:
· Energy - assets which generate energy for sale through sustainable or
renewable means in the form of biogas or electrical power;
· Circular - assets which recover a valuable component of an
industrial, municipal or agricultural waste stream for re-use, generally
reducing the system carbon footprint in parallel; and
· Vector - assets involved in the storage, transmission, or delivery of
energy within a low carbon context.
The Board believes it will offer Shareholders and investors exposure to an
asset portfolio with an attractive risk/reward profile within the sustainable
energy ecosystem. Over time, the Board believes shareholder value can be
delivered through operational improvement, driving improved profitability;
reinvestment of cash flow to fund further acquisition; the periodic
refinancing of the portfolio as it grows, supporting lower cost asset finance;
and ultimately the payment of a regular dividend.
Outlook
During the first half of 2023 the primary focus within Scirocco has been on
delivering the completion of the sale of the Company's Ruvuma interest to APT.
In addition, the team have continued to work with EAG on the development of
the AD portfolio including support on due diligence on one asset. We believe
that Scirocco's experience of working with EAG ratifies our investment thesis
and shows how the Company can work with investee companies to grow value.
We look forward to assessing the range of opportunities open to the Company
taking account of its expected cash position going through the remainder of
2023 and into 2024 and engaging with shareholders/stakeholders to agree the
optimal path to creating value.
Alastair Ferguson
Non-Executive Chairman
Date: 29 September 2023
Investment Update
Energy Acquisitions Group Limited
The Company invested in EAG in September 2021 to support the acquisition of
Greenan Generation Limited ("GGL").
Financial
In H1 2023 the revenue received for the period by GGL totalled £574k
(unaudited). This compares to the same period in 2022 where revenue was £544k
(unaudited). EBITDA for H1 2023 was £151k.
The lower EBITDA level was driven by an intermittent fault with the incoming
power line causing ancillary equipment to fail. This resulted in lower uptime,
lower power export and increased costs for repair works. The issue has now
been addressed and preventative investments made to ensure this will not
re-occur.
Operational
During H1 2023, Greenan experienced a mix bag in terms of performance,
primarily due to an intermittent frequency fluctuation issue between April and
June. This had the effect of causing failures in pumps, drives and ancillary
control panels on the Greenan plant. The incoming power supply from the DNO
substation was found to be the fault, and subsequently, Greenan has undertaken
an electrical futureproofing scheme to ensure that all of its panels and
drives are protected from frequency fluctuations in future. This period saw
substantial upgrade work to electrical infrastructure including:
· All incoming cable upgraded to armored cable;
· All drives protected with voltage and frequency fluctuation devices;
and
· Upgrade and replacement of auger, pump and mixer drives in main
control panel.
During H1 2023, electricity pricing to Greenan stabilized around £90 per
MWhr, a significant average reduction from £163 per MWhr in the same period
last year. Turnover for the H1 2023 was £574k with corresponding EBITDA of
£151k. April, May and June had average operational efficiencies of 81% but
otherwise efficiencies in the period have been strong at over 95%.
Given the electrical upgrade works carried out, it is not expected that any
underperformance due to electrical failures or complications will be repeated.
Business Development
Throughout H1 2023, EAG identified a number of investable projects which met
its investment criteria. Due to the extended time to complete the Ruvuma
divestment and the absence of a suitable authority to issue shares to raise
investment capital, Scirocco is unable to support further investment until the
completion of Ruvuma is delivered. As a result the Company is aware that EAG
has engaged with other prospective investors who can support further
acquisitions.
Helium One
At 1 January 2023 Scirocco held 2,906,088 shares in Helium One, 1 million of
which were the subject of ongoing recovery discussions with the Pello Capital
administrator, Evelyn Partners.
Within the period, 1,906,088 shares in Helium One were sold for an average
price of 7.5p/share.
After the end of the period 1,000,000 shares in Helium One were delivered to
Scirocco following consultation with Evelyn Partners pursuant to the options
exercised by the Company in 2021. These shares were sold during August 2023 at
an average price of 7.5p/share delivering net proceeds of c. £75,000.
Scirocco's remaining holding in Helium One is nil shares.
Tom Reynolds
Chief Executive Officer
Date: 29 September 2023
Principal risks and uncertainties
The principal risks facing the Company were set out in the Company's Annual
Report and Accounts to 31 December 2022
As the investment policy is implemented, the Company's risk profile will
continue to evolve due to its exposure to different assets and markets, and a
full statement of risks will be published in subsequent Annual Report and
Accounts.
On behalf of the board
Alastair Ferguson
Non-Executive Chairman
Date: 29 September 2023
Directors' responsibilities
The Directors are responsible for preparing the Interim Report in accordance
with applicable law and regulations.
Company law requires the Directors to prepare Company financial statements for
each financial year. Under AIM Rules for Companies of the London Stock
Exchange they are required to prepare the Company financial statements in
accordance with International Financial Reporting Standards in conformity with
the requirements of the Companies Act 2006. Under company law the Directors
must not approve the financial statements unless they are satisfied that they
give a true and fair view of the state of affairs of the Company and of the
profit or loss of the Company for that period. The Directors are also required
to prepare financial statements in accordance with the rules of the London
Stock Exchange for companies trading securities on AIM.
Company law requires the Directors to prepare Company financial statements for
each financial year. Under AIM Rules for Companies of the London Stock
Exchange they are required to prepare the Company financial statements in
accordance with International Financial Reporting Standards (IFRSs) in
conformity with the Companies Act 2006.
In preparing these financial statements, the Directors are required to:
· select suitable accounting policies and then apply them consistently;
· make judgements and accounting estimates that are reasonable,
relevant and reliable;
· state whether they have been prepared in accordance with IFRS; and
· prepare the financial statements on the going concern basis unless it
is inappropriate to presume that the company will continue in business.
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Company's transactions and disclose with
reasonable accuracy at any time the financial position of the Company and
enable them to ensure that the financial statements comply with the
requirements of the Companies Act 2006. They are also responsible for
safeguarding the assets of the Company and hence for taking reasonable steps
for the prevention and detection of fraud and other irregularities.
Website publication
The Directors are responsible for ensuring the annual report and the financial
statements are made available on the Company's website. Financial statements
are published on the Company's website in accordance with legislation in the
United Kingdom governing the preparation and dissemination of financial
statements, which may vary from legislation in other jurisdictions. The
maintenance and integrity of the Company's website is the responsibility of
the Directors. The Directors' responsibility also extends to the ongoing
integrity of the financial statements contained therein.
CONDENSED INTERIM STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
Six months ended Six months ended
Notes 30 June 2023 30 June 2022
(Unaudited) (Unaudited)
Continuing operations £ 000 £ 000
Administrative expenses 6 (971) (733)
Share of loss from joint venture (40) -
Loss before investment activities (1,011) (733)
Interest income 5 73 65
Gain on disposal of shares 8 16 57
Costs to sell investments (27) (30)
Exchange gain/(loss) 136 72
Fair value through profit and loss (21) 27
(Loss)/profit on ordinary activities before taxation (834) (542)
Income tax expense
- -
Total comprehensive (loss)/profit for the period from continuing operations (834) (542)
Discontinued operations
Profit/(loss) recognised on classification as held for sale 9 221 1,314
Profit/(loss) for the period from discontinuing operations 221 1,314
Profit and total comprehensive income for the period
(613) 772
Total comprehensive income attributable to owners of the parent
(613) 772
Earnings per share (pence)
Basic 10 (0.07) 0.10
Diluted 0.10
Earnings per share from continuing operations 10
Basic (0.09) (0.07)
Diluted
10
Earnings per share from discontinued operations
Basic 0.02 0.17
Diluted 0.02 0.17
CONDENSED INTERIM STATEMENT OF FINANCIAL POSITION
As at As at
Notes 30 June 2023 31 December 2022
(Unaudited) (Audited)
£ 000 £ 000
Non-current assets
Loan receivable from related party 1,522 1,448
Investment in joint venture 13 - 40
Total non-current assets 1,522 1,488
Current assets
Trade and other receivables 15 134 210
Cash and cash equivalents 295 750
Financial assets at fair value through profit or loss 11 58 273
Assets held for sale 14 11,445 10,715
Total current assets 11,932 11,948
Total assets 13,454 13,436
Current liabilities
Trade and other payables 16 487 224
Liabilities held for sale 14 3,478 3,110
Total current liabilities 3,965 3,334
Net current assets 7,967 8,614
Total liabilities 3,965 3,334
Net assets 9,489 10,102
Equity
Share capital 17 1,801 1,801
Deferred share capital 17 1,831 1,831
Share premium reserve 18 38,408 38,408
Share-based payments 19 2,071 2,071
Retained earnings (34,622) (34,009)
Total equity 9,489 10,102
CONDENSED STATEMENT OF CHANGES IN EQUITY
Deferred share Share premium Share-based Retained earnings Total
Share capital capital payments
£000 £000 £000 £000 £000 £000
Balance at 31 December 2021 1,518 2,729 38,155 1,941 (29,194) 15,149
Profit for the period - - - - 772 772
Credit to equity for equity-settled share-based payments - - - 119 - 119
Balance at 30 June 2022 1,518 2,729 38,155 2,060 (28,422) 16,040
Loss for the period - - - - (5,587) (5,587)
Issue of share capital 283 - 253 - - 536
Consideration received for shares to be issued - (898) - - - (898)
Credit to equity for equity-settled share-based payments - - - 11 - 11
Balance at 31 December 2022 1,801 1,831 38,408 2,071 (34,009) 10,102
Profit for the period - - - - (613) (613)
Balance at 30 June 2023 1,801 1,831 38,408 2,071 (34,622) 9,489
CONDENSED INTERIM STATEMENT OF CASH FLOWS
Six months ended Six months ended
30 June 2023 30 June 2022
(Unaudited) (Unaudited)
£ 000 £ 000
Cash flows from operating activities
Cash absorbed by continuing (487) (580)
operations 25
Interest paid (20) -
Net cash outflow from operating activities (507) (580)
Cash flows from investing activities
Cash movements in relation to assets held for sale (509) (381)
Proceeds from disposal of investments 193 -
Loan granted to related party - (70)
(316) (451)
Net cash (outflow)/inflow from investing activities
Cash flows from financing activities
368 -
Proceeds of long-term borrowings
368 -
Net cash (outflow)/inflow from financing activities
Net (decrease)/increase in cash and cash equivalents (455) (1,031)
Cash and cash equivalents at beginning of period 750 2,059
Cash and cash equivalents at end of period 295 1,028
NOTES TO CONDENSED INTERIM FINANCIAL INFORMATION
1 BASIS OF PREPARATION
The financial information has been prepared under the historical cost
convention and on a going concern basis and in accordance with International
Financial Reporting Standards and as applied in accordance with the provisions
of the Companies Act 2006. The principal accounting policies adopted by the
Company are set out below.
The condensed interim financial information for the period ended 30 June 2023
has not been audited or reviewed in accordance with the International Standard
on Review Engagements 2410 issued by the Auditing Practices Board. The figures
were prepared using applicable accounting policies and practices consistent
with those adopted in the statutory accounts for the year ended 31 December
2022. The figures for the year ended 31 December 2022 have been extracted from
these accounts, which have been delivered to the Registrar of Companies, and
contained an unqualified audit report.
The condensed interim financial information contained in this document does
not constitute statutory accounts. In the opinion of the Directors the
financial information for this period fairly presents the financial position,
result of operations and cash flows for this period.
This Interim Financial Report was approved by the Board of Directors on 29
September 2023.
Statement of compliance
These condensed company interim financial statements have been prepared in
accordance with International Financial Reporting Standards (IFRS) as adopted
by the European Union with the exception of International Accounting Standard
('IAS') 34 - Interim Financial Reporting. Accordingly, the interim financial
statements do not include all of the information or disclosures required in
the annual financial statements and should be read in conjunction with the
Company's 2022 annual financial statements.
2 ADOPTION OF NEW AND REVISED STANDARDS
The accounting policies adopted in the preparation of the interim financial
statements are consistent with those followed in the preparation of the
Company's annual financial statements for the year ended 31 December 2022,
except for the adoption of new standards effective as of 1 January 2023. The
Company has not early adopted any standard, interpretation or amendment that
has been issued but is not yet effective.
IFRS 17
Insurance contracts
IAS 1 and IFRS Practice Statement 2 Disclosure of
accounting policies
IAS 8 (Amendments)
Definition of accounting estimates
IAS 12 (Amendments)
Deferred tax related to assets and liabilities
arising from a single transaction
IFRS 16 (Amendments)
Liability in a Sale and Leaseback
IAS 1 (Amendments)
Classification of liabilities as current or
non-current - deferral of effective date
IAS 1 (Amendments)
Non-current liabilities with covenants
NOTES TO CONDENSED INTERIM FINANCIAL INFORMATION (CONTINUED)
3 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
The Company makes estimates and assumptions regarding the future. Estimates
and judgements are continually evaluated based on historical experience and
other factors, including expectations of future events that are believed to be
reasonable under the circumstances. In the future, actual experience may
differ from these estimates and assumptions. The estimates and assumptions
that have a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial period are
discussed below.
Share-based payments (note 17)
The Company utilised an equity-settled share-based remuneration scheme for
employees. Employee services received, and the corresponding increase in
equity, are measured by reference to the fair value of the equity instruments
at the date of grant, excluding the impact of any non-market vesting
conditions. The fair value of share options is estimated by using
Black-Scholes valuation method as at the date of grant. The assumptions used
in the valuation are described in note 17 and include, among others, the
expected volatility, expected life of the options and number of options
expected to vest.
Recoverability of trade receivables (note 14)
The Company considers the recoverability of trade receivables to be a key area
of judgement. The Company considers trade receivables to be credit impaired
once there is evidence a loss has been incurred. An expected credit loss is
calculated on an annual basis. The Directors believe that the debtor is still
recoverable based on their knowledge of the market in Tanzania and historical
evidence of similar receivables being paid. The Directors have recognised the
asset as they believe they are still legally entitled to receive it. The
Tanzanian Government have a history of building up receivables with other
companies and billing them at a future date.
NOTES TO CONDENSED INTERIM FINANCIAL INFORMATION (CONTINUED)
4 OPERATING SEGMENTS
Based on risks and returns, the Directors consider that the primary reporting
format is by business segment. The Directors consider that there are two
business segments:
· Head office support from the UK
· Discontinued operations on its investments in Tanzania
Continuing Operations Discontinued Operations
6 months to 30 June 2023 UK Tanzania Total
£000 £000 £000
Administrative expenses (971) - (971)
Share of loss in joint venture (40) - (40)
Interest income 73 - 73
Other gains and losses 125 221 346
Fair value through profit and loss (21) - (21)
Profit/(loss) from operations per reportable segment (834) 221 (613)
Additions to non-current assets 74 - 74
Reportable segment assets 1,935 11,445 13,380
Reportable segment liabilities 487 3,478 3,965
6 months to 30 June 2022 Continuing Discontinuing Operations Tanzania
Operations
UK Total
£000 £000 £000
Administrative expenses (733) - (733)
Interest income 65 - 65
Other gains and losses 99 1,314 1,413
Fair value through profit and loss 27 - 27
Profit/(loss) from operations per reportable segment (542) 1,314 772
Additions to non-current assets 27 - 27
Reportable segment assets 3,078 13,295 16,373
Reportable segment liabilities (202) (166) (368)
An operating segment is a distinguishable component of the Company that
engages in business activities from which it may earn revenues and incur
expenses, whose operating results are regularly reviewed by the Company's
chief operating decision maker to make decisions about the allocation of
resources and assessment of performance and about which discrete financial
information is available.
NOTES TO CONDENSED INTERIM FINANCIAL INFORMATION (CONTINUED)
5 REVENUE
6 months to 6 months to
30 June 2023 30 June 2022
£000 £000
Other significant revenue
Interest income 73 65
Trade receivables accrue interest for non-payment. Outstanding debtors accrue
interest at a rate in accordance with the joint venture agreement and are
generally on terms of 30 days. In 2023, there is a provision of £nil (June
2022: £nil) for expected credit losses on trade receivables.
Interest income relates to interest charged on outstanding invoices.
6 EXPENSES BY NATURE
6 months to 30 June 2023 6 months to 30 June 2022
£000 £000
Continuing operations
Fees payable to the Company's auditor for the audit of the Company's financial (31) (22)
statements
Professional, legal, and consulting fees (430) (291)
AIM related costs including investor relations (31) (44)
Accounting-related services (98) (73)
Travel and subsidence (2) (7)
Office and administrative expenses (64) (9)
Other expenses (107) -
Share-based payments - (119)
Directors' remuneration (173) (133)
Wages and salaries and other related costs (35) (35)
(971) (733)
NOTES TO CONDENSED INTERIM FINANCIAL INFORMATION (CONTINUED)
7 EMPLOYEES
6 months to 6 months to
30 June 2023 30 June 2022
Average number of employees (excluding executive directors): 1 1
6 months to 6 months to
30 June 2023 30 June 2022
(unaudited) (unaudited)
£000 £000
Their aggregate remuneration comprised:
Wages and salaries 22 22
6 months to 6 months to
30 June 2023 30 June 2022
(unaudited) (unaudited)
£000 £000
Directors' remuneration 173 133
Salary and fees Share-based payments Termination payments Total
£000 £000 £000 £000
Period ended 30 June 2023
Alastair Ferguson 38 - - 38
Tom Reynolds 75 - - 75
Donald Nicolson 25 - - 25
Muir Miller 20 - - 20
Niall Roberts 8 - - 8
Matt Bower 7 - - 7
173 - - 173
Salary and fees Share-based payments Termination payments Total
£000 £000 £000 £000
Period ended 30 June 2022
Alastair Ferguson 37 25 - 62
Tom Reynolds 75 25 - 100
Donald Nicolson 13 37 - 50
Muir Miller 8 20 - 28
Douglas Rycroft - 12 - 12
Niall Roberts - - - -
Matt Bower - - - -
133 119 - 252
From February 2020, the Directors opted to defer their salaries with payments
resuming from 2022. Shares in lieu of salary will be issued for deferred
amounts (note 17).
No directors received pension contributions in H1 2023 or 2022.
NOTES TO CONDENSED INTERIM FINANCIAL INFORMATION (CONTINUED)
8 OTHER GAINS AND LOSSES
6 months to 6 months to
30 June 2023 30 June 2022
£000 £000
Gain on disposal of Helium One shares 16 57
16 57
9 DISCONTINUED OPERATIONS
The Company has a 25% interest in a high-quality development project in
Tanzania which the Directors are actively seeking to divest. This stake has
been valued at $16m and operations relating to this stake are detailed below.
The results of the discontinued business, which have been included in the
income statement, balance sheet and cash flow statement, were as follows:
6 months to 6 months to
30 June 2023 30 June 2022
£000 £000
Impairment credit on fair value revaluation 221 1,314
Net profit/(loss) attributable to discontinuation 221 1,314
The profit after tax on disposal of the assets held for sale is made up as
follows:
£000
Fair value less costs to sell 7,986
Net book value of assets disposed:
Intangible assets (18,877)
Oil and gas properties (380)
Loan to ARA Petroleum 3,292
Decommissioning provision 166
Impairment on fair value revaluation at 31 December 2022 8,034
(7,765)
Impairment on fair value revaluation at 30 June 2023 221
Earnings per share impact from discontinued operations:
6 months to 6 months to
30 June 2023 30 June 2022
£000 £000
Basic and diluted impact (pence) 0.02 0.17
NOTES TO CONDENSED INTERIM FINANCIAL INFORMATION (CONTINUED)
9 DISCONTINUED OPERATIONS (CONTINUED)
Cash flow statement
6 months to 6 months to
30 June 2023 30 June 2022
£000 £000
Net cash flows from investing activities (509) (381)
Total cash flows from discontinued operations (509) (381)
10 EARNINGS PER SHARE
The calculation of earnings per share is based on the loss after taxation
divided by the weighted average number of shares in issue during the period:
Six months to Six months to
30 June 2023 30 June 2022
(Unaudited) (Unaudited)
Weighted average number of ordinary shares for basic profit/loss per share
(000)
900,496 758,790
Weighted average number of ordinary shares for diluted profit/loss per share 1,022,703 758,790
(000)
£000 £000
Earnings
Continuing operations
(Loss)/profit for the period from continued operations (834) (542)
Discontinued operations
Profit/(loss) for the period from discontinued operations 221 1,314
Basic earnings per share (pence)
From continuing operations (0.09) (0.07)
From discontinuing operations 0.02 0.17
(0.07) 0.10
Diluted earnings per share (pence)
From continuing operations - -
From discontinuing operations 0.02 0.17
As the inclusion of the potential ordinary shares would result in a decrease
in the loss per share, they are anti-dilutive and, as such, a diluted loss per
share is not included.
NOTES TO CONDENSED INTERIM FINANCIAL INFORMATION (CONTINUED)
11 INVESTMENTS
Quoted Equity Investments
Cost 30 June 31 December 2022
2023 £000
£000
Quoted equity investments 58 206
Unquoted equity investments - 67
58 273
The quoted investments in the current year relate to an equity investment held
in Helium One Ltd, a company incorporated in the British Virgin Islands. Their
subsidiaries hold helium mining licenses across Tanzania.
The shares held have been valued at the mark-to-market value of 5.75p per
share at 30 June 2023. During the period to 30 June 2023, the Company disposed
of 1,906,088 shares. On disposal of the shares the investment was revalued to
the mark-to-market value on the various dates of disposal and a subsequent
gain or loss recognised.
Unquoted Equity Investments
Cost £000
At 1 January 2022 125
Remeasurement (58)
At 31 December 2022 67
Disposal
At 31 December and 30 June 2023 (67)
Carrying amount
At 30 June 2023 -
The unquoted investments in the current period relate to an equity investment
held in Corallian Energy Limited, a company incorporated in England which
holds interests in oil and gas basins in the United Kingdom.
12 SUBSIDIARIES
Details of the company's subsidiaries at 30 June 2023 are as follows:
Name of undertaking Registered office Principal activities Class of shares held % held
Direct
Scirocco Energy International Limited 1 Park Row, Leeds, United Kingdom, LS1 5AB Dormant Holding Company Ordinary 100.00
Scirocco Energy (UK) Limited 1 Park Row, Leeds, United Kingdom, LS1 5AB Investment Holding Company Ordinary 100.00
The results of all subsidiaries are included within the consolidated results
of Scirocco Energy plc.
Under section 479A of the Companies Act 2006, Scirocco Energy PLC agrees that
Scirocco Energy (UK) Limited is exempt from audit. Under section 479C,
Scirocco Energy PLC guarantees all outstanding liabilities for the subsidiary.
NOTES TO CONDENSED INTERIM FINANCIAL INFORMATION (CONTINUED)
13 JOINT VENTURES
The Group has a 50% (2022: 50%) interest in joint venture, Energy Acquisitions
Group Limited, a company incorporated in Northern Ireland. The primary
activity of Energy Acquisitions Group Limited is to acquire and finance
renewable energy assets in the United Kingdom.
The Group's interest in EAG is accounted for using the equity method in the
consolidated financial statements. Summarized financial information of the
joint venture, and reconciliation with the carrying amount of the investment
in the consolidated financial statements at 30 June 2022 are set out below:
Name of undertaking Registered office Principal activities Class of shares held % held
Direct
Energy Acquisitions Group Limited 32 Lodge Road, Coleraine, Northern Ireland, BT52 1NB Investment in renewable energy assets Ordinary 50.00
Energy Acquisitions Group Limited consolidated summary statement of financial
position (unaudited)
2023 2022
£000 £000
Non-current assets 3,039 2,960
Current assets 493 593
Current liabilities (98) (113)
Non-current liabilities (3,290) (3,360)
The following amounts have been included in the amounts above
Cash and cash equivalents 223 326
Current financial liabilities (98) (113)
Non-current financial liabilities (3,290) (3,360)
Net assets (100%) 144 80
Group share of net assets (50%) 72 40
Energy Acquisitions Group Limited consolidated summary profit and loss account
(unaudited)
2023 2022
£000 £000
Revenue 574 1,414
Direct costs (318) (561)
Overhead and administrative expenses (205) (297)
Interest payable and similar expenses (135) (334)
Profit for the financial year (84) 222
The following amounts have been included in the amounts above
Depreciation and amortization 33 62
Interest income - -
Interest expense 135 334
Income tax expense - -
There were no dividends received from the joint venture during the year and
there are no dividends forecast.
The joint venture had no contingent liabilities or commitments as at 30 June
2023 and 2022. The financial statements of the JV are prepared for the same
reporting period as the Group. When necessary, adjustments are made to bring
the accounting policies in line with those of the Group. Presentation of the
summarized financial information has been made on the basis of the Joint
Venture's published financial statements.
NOTES TO CONDENSED INTERIM FINANCIAL INFORMATION (CONTINUED)
14 ASSETS AND LIABILITIES CLASSIFIED AS HELD FOR SALE
30 June 2023 31 December 2022
£000 £000
Intangible assets 11,445 10,714
Total assets classified as held for sale 11,445 10,714
Loan 3,312 2,944
Decommissioning provision 166 166
3,478 3,110
At the date of authorization of these interim financial statements, it was
determined that a sale would be highly probable, following the approval of
shareholders at the general meeting on 29 June 2022.
15 TRADE AND OTHER RECEVIABLES
30 June 2023 31 December 2022
£000 £000
Other receivables 91 96
Less provision for expected credit losses - -
91 96
VAT recoverable 32 74
Prepayments 11 40
134 210
The Directors consider that the carrying amount of trade and other receivables
approximates to their fair value.
16 TRADE AND OTHER PAYABLES
30 June 2023 31 December 2022
£000 £000
Trade payables 100 38
Accruals 384 65
Other payables 3 121
487 224
The Directors consider that the carrying amount of trade payables approximates
to their fair value.
NOTES TO CONDENSED INTERIM FINANCIAL INFORMATION (CONTINUED)
17 SHARE CAPITAL
Number of shares Nominal value
£000
a) Called up, allotted, issued and fully paid: Ordinary shares of 0.2
pence each
As at 31 December 2021 758,787,925 1,518
24 January 2022 - placing for cash at 0.72 pence 20,465,467 40
18 March 2022 - placing for cash at 0.54 pence 28,490,028 57
6 May 2022 - placing for cash at 0.46 pence 17,459,747 35
21 July 2022 - placing for cash at 0.28 pence 30,369,291 61
27 September 2022 - placing for cash at 0.20 pence 44,923,630 90
At 31 December 2022 and 30 June 2023 900,496,088 1,801
30 June 2023 31 December 2022
£000 £000
b) Deferred shares
At beginning of the period 1,831 2,729
Shares not issued moved to deferred share capital - 19
Issue of new shares - (556)
Cash settlement of shares not issued - (180)
Reclassify shares not issued as current liability (181)
1,831 1,831
c) Total share options in issue
During the period no incentive options were granted (2022: nil). As at June 30
2022 there were 51,419,781 incentive options in issue (2022: 51,419,781).
During the period there were no share options in lieu of salary and/or fees
due to the relevant option holders were granted (2022: 10,193.284). As at 30
June 2023 there were 54,246,990 share options in lieu of salary and/or fees in
issue (2022: 44,053,706).
d) Total warrants in issue
All warrants lapsed in the prior year and no warrants were issued, cancelled
or exercised during the period (2022: no warrants were issued).
18 SHARE PREMIUM ACCOUNT
30 June 2023 31 December 2022
£000 £000
At beginning of the period 38,408 38,399
Issue of new shares - 253
38,408 38,408
NOTES TO CONDENSED INTERIM FINANCIAL INFORMATION (CONTINUED)
19 SHARE BASED PAYMENT
The Company has opted to remunerate the Directors for the period to 30 June
2022 by a grant of an option over the Ordinary Shares of the capital of the
Company as detailed in the deed of option grants. The life of the options is
18 months. There were 3 executive directors and 2 non-executive directors who
are members of the plan. The following table summarizes the expense recognized
in the Statement of Comprehensive Income since the options were granted.
30 June 2023 31 December 2022
£000 £000
Directors' options - 32
Incentive options - 87
Credit to equity for equity-settled share-based payments - 119
During June 2020 (and the height of the Covid-19 pandemic) the Company sought
to put in place a strategy that would help to conserve the Company's cash
position in the near term and to maximise alignment between the Board,
Management team and Shareholders.
Accordingly, the Company proposed to grant nominal cost options over new
Ordinary Shares of 0.2p (£0.002) to Directors and select members of the
Management Team ("the Director Options"). The award of Director Options ceased
in August 2022 and the total options issued up to this date were 70,787,245.
In 2021, members of the Management Team were also awarded options over
Ordinary Shares with an exercise price of 1.3p (£0.013) ("the Incentive
Options"), which was approximately a 24% premium to the closing mid-market
price of the Company's Ordinary Shares on 26June 2020. Each Incentive Option
is ordinarily exercisable on the 3rd anniversary of the grant date (being 30
June 2023), except in the event of specified corporate events or,
exceptionally, if the option holder leaves as a 'good leaver'. No further
Incentive Options were awarded in the period ended June 2023 or in the year
ended December 2022.
The Company used the Black-Scholes model to determine the value of the
incentive options and the inputs. There were no incentive share options for
the period ended 30 June 2023. The value of the options and the inputs for the
period ended 30 June 2023 were as follows:
Issue 30 June 2020
Incentive options
Share price at grant (pence) 1.09
Exercise price at grant (pence) 1.30
Expected volatility (%) 84.42
Expected life (years) 6
Risk free rate (%) 0.17
Expected dividends (pence) nil
Expected volatility was determined using the Company's share price for the
preceding 3 years.
The total share-based payment expense in the period for the Company was £nil
in relation to the issue of incentive options (2022: £86,806) and £nil
finance charges in relation to warrants (2022: £nil).
The Incentive Options granted represent approximately 6.8% of the Company's
issued share capital (excluding warrants issued to Prolific Basins LLC). The
Board has retained additional headroom for additional Incentive Options as it
recognises that the future performance of the Company will be dependent on its
ability to retain the services of key executives.
NOTES TO CONDENSED INTERIM FINANCIAL INFORMATION (CONTINUED)
20 FINANCIAL INSTRUMENTS
Categories of financial instruments
The following table combines information about:
· Classes of financial instruments based on their nature
and characteristics; and
· The carrying amounts of financial instruments
30 June 2023 31 December 2022
£000 £000
Financial assets at amortised cost
Other debtors 91 96
Prepayments 11 40
Cash and cash equivalents 295 750
Loan receivable from related party 1,522 1,448
1,919 2,334
Book value Fair value Book value Fair value
30 June 2023 30 June 2023 31 Dec 2022 31 Dec 2022
£000 £000 £000 £000
Financial assets at fair value
Non-current investment - Helium One 58 58 206 206
Non-current investment - Corallian Energy Limited - - 67 67
58 58 273 273
30 June 2023 31 December 2022
£000 £000
Financial liabilities at amortised cost
Trade payables 100 38
Accruals 384 65
Other payables 3 121
487 224
The table below analyses financial instruments carried at fair value, by
valuation method.
Fair values are categorized into different levels in a fair value hierarchy
based on the inputs used in the valuation techniques as follows:
· Level 1: quoted prices (unadjusted) in active markets for
identical assets or liabilities.
· Level 2: inputs other than quoted prices included in Level 1 that
are observable for the asset or liability, either directly (i.e., as prices)
or indirectly (i.e., derived from prices).
· Level 3: inputs for the asset or liability that are not based on
observable market data (unobservable inputs).
The fair values for the Company's assets and liabilities are not materially
different from their carrying values in the financial statements.
The following table presents the Company's financial assets that are measured
at fair value:
Level 1 Level 2 Level 3 Total
£000 £000 £000 £000
Non-current investment - Helium One 58 - - 58
58 - - 58
NOTES TO CONDENSED INTERIM FINANCIAL INFORMATION (CONTINUED)
20 FINANCIAL INSTRUMENTS (CONTINUED)
The Company does not have any liabilities measured at fair value. There have
been no transfers in to or transfers out of fair value hierarchy levels in the
period.
Financial instruments in level 1
The fair value of financial instruments traded in active markets is based on
quoted market prices at the reporting date. A market is regarded as active if
quoted prices are readily and regularly available from an exchange, dealer,
broker, industry group, pricing service, or regulatory agency, and those
prices represent actual and regularly occurring market transactions on an
arm's length basis. The quoted market price used for financial assets held by
the Company is the current bid price.
Financial instruments in level 2
The fair value of financial instruments that are not traded in an active
market is determined by using valuation techniques. These valuation techniques
maximize the use of observable market data where it is available and rely as
little as possible on entity specific estimates. If all significant inputs
required to fair value an instrument are observable, the instrument is
included in level 2. No investments are valued using level 2 inputs in the
period.
Financial instruments in level 3
If one or more of the significant inputs is not based on observable market
data, the instrument is included in level 3. Following the guidance of IFRS 9,
these financial instruments have been assessed to determine the fair value of
the instrument. In their assessment, the Directors have considered both
external and internal indicators to decide whether an impairment charge must
be made or whether there needs to be a fair value uplift on the instrument.
The carrying value of the Company's financial assets and liabilities measured
at amortised cost are approximately equal to their fair value. The Company is
exposed through its operations to one or more of the following financial
risks:
· Fair value or cash flow interest rate risk
· Foreign currency risk
· Liquidity risk
· Credit risk
· Market risk
· Expected credit losses
Policy for managing these risks is set by the Board. The policy for each of
the above risks is described in more detail below.
Fair value and cash flow interest rate risk
Generally, the Company has a policy of holding debt at a floating rate. The
Directors will revisit the appropriateness of this policy should the Company's
operations change in size or nature. Operations are not permitted to borrow
long-term from external sources locally.
Foreign currency risk
Foreign exchange risk arises because the Company has operations located in
various parts of the world whose functional currency is not the same as the
functional currency in which the Company's investments are operating. The
Company's net assets are exposed to currency risk giving rise to gains or
losses on retranslation into sterling. Only in exceptional circumstances will
the Company consider hedging its net investments in overseas operations as
generally it does not consider that the reduction in volatility in net assets
warrants the cash flow risk created from such hedging techniques.
NOTES TO CONDENSED INTERIM FINANCIAL INFORMATION (CONTINUED)
20 FINANCIAL INSTRUMENTS (CONTINUED)
The Company's exposure to foreign currency risk at the end of the reporting
period is summarized below.
30 June 2023 31 December 2022
$000 $000
USD USD
Trade and other receivables 115 116
Cash and cash equivalents 372 878
Trade and other payables - -
Net exposure 487 994
Sensitivity analysis
As shown in the table above, the Company is primarily exposed to changes in
the GBP:USD exchange rate through its cash balance held in USD and trading
balances. The table below shows the impact in GBP on pre-tax profit/loss of a
10% increase/decrease in the GBP:USD exchange rate, holding all other
variables constant.
30 June 2023 31 December 2022
£000 £000
GBP:USD exchange rate increases 10% 32 136
GBP:USD exchange rate decreases 10% (30) (69)
Liquidity risk
The liquidity risk of each entity is managed centrally by the treasury
function. Each operation has a facility with treasury, the amount of the
facility being based on budgets. The budgets are set locally and agreed by the
Board annually in advance, enabling the cash requirements to be anticipated.
Where facilities of the Group need to be increased, approval must be sought
from the finance Director. Where the amount of the facility is above a certain
level, agreement of the Board is needed.
All surplus cash is held centrally to maximize the returns on deposits through
economies of scale. The type of cash instrument used, and its maturity date
will depend on the forecast cash requirements.
The table below analyses the Company's financial liabilities into relevant
maturity groupings based on their contractual maturities. The amounts
presented are the undiscounted cash flows.
Less than 6 months 6 to 12 months Between 1 and 2 years Between 2 and 5 years
£000 £000 £000 £000
30 June 2023
Trade and other payables 487 - - -
Total 487 - - -
31 December 2022
Trade and other payables 224 - - -
Total 224 - - -
NOTES TO CONDENSED INTERIM FINANCIAL INFORMATION (CONTINUED)
20 FINANCIAL INSTRUMENTS (CONTINUED)
Credit risk
The Company is mainly exposed to credit risk from credit sales. It is Company
policy, implemented locally, to assess the credit risk of new customers before
entering contracts. Such credit ratings are taken into account by local
business practices.
The Company does not enter into complex derivatives to manage credit risk,
although in certain isolated cases may take steps to mitigate such risks if it
is sufficiently concentrated.
Market risk
As the Company invests in listed companies, the market risk will be that of
finding suitable investments for the Company to invest in and the returns that
those investments will yield given the markets in which investments are made.
Expected credit losses
Allowances are recognized as required under the IFRS 9 impairment model and
continue to be carried until there are indicators that there is no reasonable
expectation of recovery.
For trade and other receivables which do not contain a significant financing
component, the Company applies the simplified approach. This approach requires
the allowance for expected credit losses to be recognized at an amount equal
to lifetime expected credit losses. For other debt financial assets, the
Company applies the general approach to providing for expected credit losses
as prescribed by IFRS 9, which permits for the recognition of an allowance for
the estimated expected loss resulting from default in the subsequent 12-month
period. Exposure to credit loss is monitored on a continual basis and, where
material, the allowance for expected credit losses is adjusted to reflect the
risk of default during the lifetime of the financial asset should a
significant change in credit risk be identified.
Most the Company's financial assets are expected to have a low risk of
default. A review of the historical occurrence of credit losses indicates that
credit losses are insignificant due to the size of the Company's clients and
the nature of the services provided. The outlook for the oil and gas industry
is not expected to result in a significant change in the Company's exposure to
credit losses. As lifetime expected credit losses are not expected to be
significant the Company has opted not to adopt the practical expedient
available under IFRS 9 to utilize a provision matrix for the recognition of
lifetime expected credit losses on trade receivables. Allowances are
calculated on a case-by-case basis based on the credit risk applicable to
individual counterparties.
Exposure to credit risk is continually monitored to identify financial assets
which experience a significant change in credit risk. In assessing for
significant changes in credit risk the Company makes use of operational
simplifications permitted by IFRS 9. The Company considers a financial asset
to have low credit risk if the asset has a low risk of default; the
counterparty has a strong capacity to meet its contractual cash flow
obligations in the near term; and no adverse changes in economic or business
conditions have been identified which in the longer term may, but will not
necessarily, reduce the ability of the counterparty to fulfil its contractual
cash flow obligations. Where a financial asset becomes more than 30 days past
its due date additional procedures are performed to determine the reasons for
non-payment to identify if a change in the exposure to credit risk has
occurred.
Should a significant change in the exposure to credit risk be identified the
allowance for expected credit losses is increased to reflect the risk of
expected default in the lifetime of the financial asset. The Company
continually monitors for indications that a financial asset has become credit
impaired with an allowance for credit impairment recognised when the loss is
incurred. Where a financial asset becomes more than 90 days past its due date,
additional procedures are performed to determine the reasons for non-payment
to identify if the asset has become credit impaired.
NOTES TO CONDENSED INTERIM FINANCIAL INFORMATION (CONTINUED)
20 FINANCIAL INSTRUMENTS (CONTINUED)
The Company considers an asset to be credit impaired once there is evidence
that a loss has been incurred. In addition to recognizing an allowance for
expected credit loss, the Company monitors for the occurrence of events that
have a detrimental impact on the recoverability of financial assets. Evidence
of credit impairment includes, but is not limited to, indications of
significant financial difficulty of the counterparty, a breach of contract or
failure to adhere to payment terms, bankruptcy or financial reorganization of
a counterparty or the disappearance of an active market for the financial
asset. A financial asset is only written off when there is no reasonable
expectation of recovery.
The Company employs the simplified approach to make an estimate of ECL. There
are no outstanding balances as at 30 June 2023 resulting in an ECL of £nil in
the current year.
21 RELATED PARTY TRANSACTIONS
The only transactions between the Company and related parties are between the
parent and its subsidiaries, relating to a loan from parent to Scirocco (UK)
limited, and interest charged on this loan. Details of Director's
remuneration, being key personnel, are given in note 7. The company did not
enter into any other transactions with entities having shared or related
directors during the periods presented.
22 ULTIMATE CONTROLLING PARTY
In the opinion of the Directors there is no controlling party.
23 COMMITMENTS
As at 30 June 2023, the Company had no material commitments (31 December 2022:
£nil).
24 RETIREMENT BENEFIT SCHEME
The Company operates only the basic pension plan required under UK
legislation, contributions thereto during the period amounted to £nil (31
December 2022: nil).
NOTES TO CONDENSED INTERIM FINANCIAL INFORMATION (CONTINUED)
25 CASH GENERATED BY OPERATIONS
30 June 2023 30 June 2022
£000 £000
Profit/(loss) for the period from continuing operations (834) (542)
Profit/(loss) for the period for discontinuing operations 221 1,314
Adjustments for:
Finance costs - -
Exchange movement 2 -
Revaluation of investments to mark-to-market value 22 (81)
(Profit)/loss on fair value revaluation of available for sale assets (221) (1,314)
Interest accrued on loan to related party (73) (65)
Equity settled share-based payment expense - 119
Share of loss in joint venture 40
Movements in working capital:
(Increase)/decrease in trade and other receivables 76 (35)
Increase in trade and other payables 280 24
Cash absorbed by operations (487) (580)
26 EVENTS AFTER THE REPORTING DATE
Ruvuma Operations Update
On 12 July 2023 the Company provided an operational update regarding the
Ruvuma asset noting the significant progress made by the JV in the development
of the Ruvuma license which provides improved clarity regarding the timing of
contingent payments under the sale arrangements between ARA Petroleum Tanzania
and Scirocco.
Highlights:
· Following analysis of the results of the initial 3D seismic
processing and interpretation, the JV partners have chosen a new optimal
target location of the Chikumbi-1 well ("CH-1"). The Tanzanian authorities
have given provisional approval of the new CH-1 well pad location and final
written approval is expected imminently.
· The full processing of the 3D seismic data is now complete. Given the
vast volume of data acquired, interpretation is now due to be completed in Q4
2023, which may result in a full revision of gas reserve and resource
potential for the field.
· A well-workover of the Ntorya-1 well ("NT-1"), to enable rapid tie-in
to the gas production facilities and bring the well into early production
requires the use of a drilling rig and remains scheduled to run after the
drilling of CH-1.
· The Gas Sales Agreement ("GSA") in respect of the Ntorya Gas Field
has now been agreed among the JV partners and the Tanzania Petroleum
Development Corporation ("TPDC"). Signing of the GSA will take place upon
approval by the Attorney General's Office.
· The Field Development Plan ("FDP") for the development of the Ntorya
Area has now been approved by all parties.
· The Development Licence for the Ntorya Area has been approved by all
relevant Tanzanian authorities and has been submitted to the Cabinet of
Ministers for final authorisation.
NOTES TO CONDENSED INTERIM FINANCIAL INFORMATION (CONTINUED)
26 EVENTS AFTER THE REPORTING DATE (CONTINUED)
· The Tanzanian authorities have continued with the necessary
workstreams to progress the construction of the export pipeline from Ntorya
to the Madimba Gas Plant to accommodate gas, according to recent public
reports, by December 2023.
· APT recently received the first shipment of long lead items,
including tubulars, required for the spudding of the CH-1 well.
· The two-week well-testing programme on the Ntorya-2 well ("NT-2"),
designed to provide additional information required for the design of in-field
processing facilities, and originally scheduled for late March 2023, is now
expected to run in the coming months.
Ruvuma Transaction Update - Tax Clearance Received
On 3 August 2023, The Company announced that it had received confirmation from
the Tanzania Revenue Authority ("TRA") of the assessed tax liability of
c. £150k, which was in line with the Company's expectations, and which has
now been paid by the Company. The TRA issued a Tax Clearance Certificate to
Scirocco on 3rd August 2023 representing a major milestone towards final
completion.
Scirocco then wrote to the Tanzanian Minister for Energy to obtain the final
approval of the transfer of the licence interest to APT. On receipt of this
approval, all conditions precedent to the transaction will be satisfied and
Scirocco and its counterparty ARA Petroleum Tanzania can proceed to complete
the transaction by the amended long stop date.
Ruvuma Transaction Update - longstop date extension
On 29 August 2023, the Company announced that whilst significant progress had
been made delivering the necessary approvals from the relevant Tanzanian
government authorities it had agreed with its counterparty APT to extend the
longstop for the Ruvuma transaction to 30 September 2023 to allow sufficient
time to achieve the final approval from the Minister of Energy.
Helium One Shares Recovered and Sold
During August 2023, the Company successfully recovered 1 million Helium One
shares which had been "trapped" after Pello Capital entered administration in
October 2022. These shares were sold during August 2023 delivering net
proceeds of c. £75k.
Ruvuma Transaction Update - longstop date extension
On 28 September 2023, the Company announced that whilst significant progress
had been made delivering the necessary approvals from the relevant Tanzanian
government authorities it had agreed with its counterparty APT to extend the
longstop for the Ruvuma transaction to 20 October 2023 to allow sufficient
time to achieve the final approval from the Minister of Energy.
27 A COPY OF THIS INTERIM STATEMENT IS AVAILABLE ON THE COMPANY'S WEBSITE:
www.sciroccoenergy.com. (http://www.sciroccoenergy.com.)
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