REG - Scirocco Energy PLC - Legacy Investment Update

Scirocco EnergyAnnouncement

29/02/2024 10:30

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RNS Number : 9665E  Scirocco Energy PLC  29 February 2024

29 February 2024

Scirocco Energy plc

("Scirocco Energy" or "the Company")

Legacy Investment Update: Ruvuma Seismic Programme

 

Scirocco Energy plc (AIM: SCIR), the AIM investing company targeting
attractive assets within the European sustainable energy and circular economy
markets, notes the below update on Ruvuma issued by Aminex:

 

·3D seismic improves Ntorya gas field volumetrics and reveals enormous wider
potential

·Operator's geomodelling significantly increases Ntorya GIIP to 3.45 Tcf

·3D seismic reveals considerable upside for Mtwara Licence with total
unrisked GIIP of 16.38 Tcf

Aminex, the oil and gas exploration and development company focused on
Tanzania, is pleased to announce that the interpretation of the recently
acquired 338 km(2) 3D seismic dataset over the Ruvuma PSA has improved the
in-place volumetrics for the Ntorya gas discovery and revealed a significantly
higher resource potential in the wider licence area than previously identified
on the existing sparse 2D database.

The interpretation of the 3D seismic has been completed by the Ruvuma PSA
operator, ARA Petroleum Tanzania (APT). Seismic inversion geomodelling,
undertaken in collaboration with Ikon Geoscience, has defined a high
confidence area with a revised in-place volumetric estimate for the Ntorya gas
discovery. A most-likely (approximating to P50) estimate of 3.45 trillion
cubic feet (Tcf) of Gas Initially In Place (GIIP) is now believed to be
potentially connected to the reservoir sandstones encountered in the Ntorya-1
(NT-1) and Ntorya-2 (NT-2) discovery wells. This revised Ntorya volume
represents a substantial increase to the published P50 GIIP of 1.64 Tcf
estimated by RPS Energy (RPS) in their February 2018 Competent Person's Report
(CPR).

Furthermore, the new 3D seismic images a possibly even larger area of gas
charged reservoir sandstones, beyond the high confidence area established by
the new seismic inversion modelling. This provides for potential additional
prospective gas volumes associated with the Cretaceous age sand units tested
in NT-1 and NT-2 (Units 1 and 2) and for the possible existence of an as yet
undrilled shallower sand unit (Unit 3), to be tested by the forthcoming
Chikumbi-1 (CH-1) appraisal well later in the year. An upside aggregated GIIP
volume for the Ntorya accumulation based on a success case in multiple stacked
sands at CH-1, is estimated by APT to be up to 7.95 Tcf (approximated to a
mean unrisked P10 GIIP).

RPS has been engaged to undertake a revision of their 2018 CPR to support the
initial Field Development Plan. The study is likely to focus on a much
narrower area of the reservoir, surrounding the two existing wells and CH-1
location that will be targeted for initial production, with the aim of
defining preliminary 1P and 2P reserve estimates. These reserve estimates are
expected to increase substantially as phased development and project
maturation progresses in light of the results of the newly reported APT
interpretation studies.

The 3D dataset has also revealed, for the first time, considerable undrilled
exploration potential within the broader licence area. Multiple undrilled
structural and stratigraphic plays spanning a range of geological intervals
are estimated by APT to contain a total Pmean unrisked GIIP potential of 8.43
Tcf (excluding Ntorya). These new plays and prospectivity currently identified
to date contain a risked Pmean GIIP exploration potential of ca 2.2 Tcf.
Ongoing work, including advanced seismic imaging and reinterpretation of
existing wells, is being undertaken to reduce geological uncertainty and
mature the new exploration portfolio. The new volumetric studies result in a
total updated unrisked GIIP volume for the Mtwara Licence of 16.38 Tcf.

APT's Report on the revised volumetrics will be posted on the Aminex website
(www.Aminex-plc.com (http://www.aminex-plc.com/) ) today.

Whilst APT awaits award of the Ntorya Development Licence from the Tanzanian
authorities, securing the assets for development for at least 25 years with
provision for further extension, the Operator continues to work on multiple
work-streams to commercialise the discovery on behalf of the joint venture
(JV) partners and contribute towards Tanzania's energy security. Upon receipt
of the Development Licence, APT will:

·      Contract a rig operator to undertake the drilling of the CH-1
appraisal well to further derisk the asset and, if successful, complete as a
gas producer.

·      Re-enter and repair a tubular leak in NT-1 to enable the well to
be safely completed as a gas producer.

·      Undertake further testing on NT-2, currently suspended as a gas
producer, using a mobile test unit, to refine the design of in-field gas
processing facilities.

·      Continue to support the Tanzanian authorities in the early
construction of a spur gas pipeline from Ntorya to the Madimba Gas Plant to
accommodate gas extraction from the field.

Development activities are ongoing, and first gas production is targeting up
to 60 MMscf/day from NT-1, NT-2 and CH-1. Tanzanian authorities have indicated
that the spur line will be completed during the first half of 2025.

The Ruvuma PSA lies adjacent to a region containing supergiant world-class LNG
projects, extending from offshore Tanzania into Mozambique waters to the
south. The JV partners intend to produce Ntorya gas into the growing domestic
gas market, helping to alleviate energy poverty and boost the energy
transition in Tanzania. A multi-year gas sales agreement was signed earlier
this year with the Tanzania Petroleum Development Corporation.

Aminex, with a 25% non-operated interest, is carried throughout the ongoing
work programme to a maximum gross capital expenditure of $140 million ($35
million net to Aminex). The carry is expected to see the Company through to
the commencement of commercial gas production from the Ntorya field at zero
cost to the Company.

Implications for Scirocco

·      US$3 million payment to Scirocco, payable upon Final Investment
Decision (FID) being taken by the parties to the Ruvuma Asset Production
Sharing Agreement or the JOA as the case may be, looks to remain on track for
end Q1 2024, albeit this may be subject to delays

·      Up to US$8 million payment to Scirocco in the form of a 25% net
revenue share from the point when Ruvuma commences delivery of gas to the gas
buyer looks to be delayed into H1 2025 (from an earlier expectation of late
2024).

·      Consequent knock on timing to payment of contingent consideration
of US$2 million to Scirocco.

 

Tom Reynolds, CEO of Scirocco commented:

"This update provides further confidence that we will realise the upside
potential of our Ruvuma divestment through the contingent payments given the
sheer scale of the project.  We note the delay to first gas which pushes back
that first contingent payment into 2025 but the key takeaway for us is the
progress towards the development of this high-quality asset, which in turn
will provide transformative payments for Scirocco over time."

The information contained within this announcement is considered to be inside
information prior to its release, as defined in Article 7 of the Market Abuse
Regulation No. 596/2014, and is disclosed in accordance with the Company's
obligations under Article 17 of those Regulations.

 

 

For further information:

 Scirocco Energy plc                                  +44 (0)20 7466 5000

 Tom Reynolds, CEO

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

 Ritchie Balmer / James Spinney / Robert Collins
 Buchanan, Financial PR                               +44 (0)20 7466 5000

 Ben Romney / Barry Archer / George Pope

 

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