REG - Scirocco Energy PLC - Ruvuma Operational Update

Scirocco EnergyAnnouncement

02/03/2023 07:45

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RNS Number : 6540R  Scirocco Energy PLC  02 March 2023

2 March 2023

Scirocco Energy plc

("Scirocco Energy" or "the Company")

Ruvuma Operational Update

Scirocco Energy (AIM: SCIR), the AIM investing company targeting attractive
assets within the European sustainable energy and circular economy
markets, notes the update issued today by Aminex PLC regarding the Ruvuma
asset (link below), in which Scirocco awaits completion of the divestment of
its 25% interest to ARA Petroleum Tanzania ("APT"):

https://www.investegate.co.uk/aminex-plc--aex-/rns/strategy-company-ops-update/202303020700035799R/
(https://www.investegate.co.uk/aminex-plc--aex-/rns/strategy-company-ops-update/202303020700035799R/)

Key highlights that relate to SCIR's ongoing divestment process are as
follows:

·    The Ruvuma [joint venture group] is now targeting first gas from the
licence in October 2023

·    A two-week well-testing programme on the Ntorya-2 well ("NT-2") has
been designed and scheduled for late March 2023, utilising a mobile testing
unit, to provide additional information required for the design of in-field
processing facilities and the export pipeline; in particular, an accurate
measurement of the gas composition.

·    Advanced negotiations regarding a Gas Sales Agreement ("GSA") in
respect of the Ntorya Gas Field are ongoing with the Tanzania Petroleum
Development Corporation ("TPDC"). It is expected that the GSA will be agreed
and finalised shortly.

·   Tanzanian Authorities have actively engaged in substantial discussions
with potential contractors for an export pipeline from Ntorya to the Madimba
Gas Plant to accommodate gas by October 2023.

·   APT has held significant discussions with potential contractors for the
construction of field processing/gathering facilities.

·    A near final Field Development Plan ("FDP") has been submitted and is
now with TPDC for final comments, which, upon approval, will lead to the
issuance of a Development Licence for the Ntorya Area.

·     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 will run after the drilling
of CH-1, expected later this year

The successful conclusion to the above workstreams is expected to have the
following impact on the project:

·    The decoupling of the spudding of CH-1 from first gas production and
receipt of gas revenues.  APT continues discussions with rig contractors and
is confident of rig availability.

·    Accelerated production from Ntorya, strongly supported by the
Tanzanian authorities, and which has now been brought forward twice from the
original schedule.

·    The FDP and resulting Development Licence will be granted up to 18
months ahead of the original schedule.

 

Ruvuma Transaction

As communicated in the RNS of 31 August 2022, Scirocco has agreed to the sale
of its 25% interest in the Ruvuma asset to APT. The total consideration of up
to US$16 million comprised of:

·    Initial consideration of US$3 million payable on completion of the
disposal, which is now expected to be in Q2 2023;

·    US$3 million payable upon final investment decision ("FID") being
taken by the parties to the Ruvuma Production Sharing Agreement or the JOA as
the case may be;

·    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.

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

"As we progress towards completion of the divestment of Scirocco's interest in
Ruvuma to APT, the likely acceleration of first gas revenue - which could be
seen as early as Q4 2023 - is a very positive step towards receiving the
contingent payments relating to FID and the deferred consideration linked to a
share of gas revenue.

The earlier than expected release of payments to Scirocco would provide
capital for reinvestment into EAG and other prospective target assets within
the deal pipeline presently being assessed. With regards to ongoing capex on
the Ruvuma project, Scirocco's exposure to these costs is covered by the loan
facility agreed with APT.  We continue to make progress towards completion
although it is possible that this may slip into Q2 2023 rather than the
previously guided timeframe of Q1 2023. We will provide an update in due
course."

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 / George Pope

 

 

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