REG - Scirocco Energy PLC - Operations Update

Scirocco EnergyAnnouncement

02/02/2022 07:00

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RNS Number : 3776A  Scirocco Energy PLC  02 February 2022

2 February 2022

Scirocco Energy plc

("Scirocco Energy" or "the Company")

Operations Update

Scirocco Energy (AIM: SCIR), the AIM investing company targeting attractive
assets within the European sustainable energy and circular economy markets is
pleased to provide the following update on its operations:

EAG Joint Venture

The Company recently supported Energy Acquisitions Group Ltd ("EAG"), the
specialist acquisition and operating vehicle in the sustainable energy sector,
to acquire its first cash generative anaerobic digestion asset, Greenan
Generation Limited ("GGL"), in which Scirocco Energy holds a 50% interest:

Financial

In Q4 2021 the revenue received for the quarter by GGL totalled £300,352
(unaudited) supported by high power prices through the period. This compares
to the same period in 2020 where revenue was £232,968 (unaudited). At current
power price levels EBITDA for the first 12 months of EAG ownership is
estimated to exceed £600,000 rather than the £470,000 guidance previously
issued.

Operational

Q4 2021 was the first complete quarter of EAG's ownership of GGL. During the
quarter the following upgrades were initiated to ensure biological,
mechanical, and financial stability going forward.

·    Engagement and retention of a consultant biologist to commence a
medium-term biological analysis of the plant to support optimisation of
feedstock and process.

·    A number of equipment upgrades including the installation of an
automated radar system to remove the requirement for operator intervention on
digester recirculation and level monitoring.

·    Extended equipment support contracts and upgraded control software
systems to ensure operational efficiency and mechanical stability.

·    Recalibration and replacement of gas monitoring and treatment
equipment to ensure accurate recording of methane and associated gas values.

·    Replaced a number of the mixers due to normal wear and tear
experienced over the plant's six-year operational life. This will ensure good
mixing and support optimal operational performance going forward.

Furthermore, the EAG team is currently reviewing options for a feedstock
optimisation programme.

Business Development

From a business development perspective, EAG is currently carrying out due
diligence on two additional AD plants. Under the arrangement with SEM
(announced by Scirocco in an RNS dated 9 December 2021) the Company and EAG
gained exclusive access to a technical solution for the processing of
digestate into a nutrient dense organic fertiliser. The EAG team is engaged in
discussions regarding two merchant installations of the SEM equipment on third
party AD plants.

Tom Reynolds, Scirocco Energy CEO commented "We are delighted to see excellent
operational performance supported by the current high wholesale power prices.
EAG's experienced team have begun investing to automate and future proof the
asset and are making clear headway with an attractive pipeline of
opportunities to support further investment. Scirocco's 50% interest in EAG
represents a robust, scalable platform primed for growth and we look forward
to working with the team going forward."

 

Tanzania Operations

Operational activities under the Ruvuma PSA in Tanzania, where Scirocco Energy
owns a legacy 25% working interest, have progressed under the supervision of
operator, ARA Petroleum Tanzania ("APT"):

·    Seismic camp fully constructed, and the contractor Africa Geophysical
Services Limited ("AGS") is completing the mobilisation of all necessary
equipment to site. This work is expected to be completed by mid-February;

·    Acquisition of the 338km(2) 3D seismic survey will commence upon full
equipment mobilisation;

·    The 3D seismic survey is an integral step in progressing and
de-risking the Ntorya gas discovery ahead of the drilling of the Chikumbi-1
("CH-1") well;

·    The seismic acquisition and subsequent interpretation will seek to
refine and confirm the exploitable gas resources of the Ntorya field.
Additionally the survey will provide greater clarity of the potential upside
of the discovery as identified by the operator APT, through a
re-interpretation of the existing 2D seismic dataset.  APT's revised mapping
and internal management estimates suggest a risked prospective gas in place
("GIIP") for the Ntorya accumulation of 3,024 Bcf (gross basis, mean case), in
multiple lobes to be tested, and a prospective, risked recoverable gas
resource of 1,990 Bcf (gross basis, mean case); and

·    APT continue to progress with well planning for the CH-1 well with
key contracting now being undertaken. The operator continues to target a Q3
spud.

Commenting on the update, Tom Reynolds said "Ruvuma Operator, ARA Petroleum
Tanzania, has injected energy into the operational programme and we are seeing
the benefit of this engagement now. Following the award of the seismic
contract in Q4 2021 and the ongoing mobilisation of the equipment to site, the
Joint Venture expects to commence shooting seismic imminently. This will
provide the high quality 3D definition of the subsurface in preparation for
the appraisal well to be drilled in Q3 this year. An exciting time on the
licence which has the potential to prove up substantial gas volumes.  As
Scirocco moves towards these key operational milestones we are continuing with
our ongoing discussions regarding possible farm-down and divestment options,
while simultaneously progressing our funding options in the event that we
retain 25% interest in Ruvuma at the time of the CH-1 well."

 

This announcement contains inside information for the purposes of Article 7 of
EU Regulation No. 596/2014, which forms part of United Kingdom domestic law by
virtue of the European (Withdrawal) Act 2018.

 

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 / James Husband

 

 

 

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