REG - Scirocco Energy PLC - Ruvuma Transaction Update – Tax Clearance Received

Scirocco EnergyAnnouncement

03/08/2023 10:00

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RNS Number : 2213I  Scirocco Energy PLC  03 August 2023

3 August 2023

Scirocco Energy plc

("Scirocco Energy" or "the Company")

Ruvuma Transaction Update - Tax Clearance Received

Scirocco Energy (AIM:SCIR), the AIM investing company targeting attractive
assets within the European sustainable energy and circular economy markets, is
pleased to provide an update regarding the Ruvuma asset, in which Scirocco
awaits completion of the divestment of its 25% interest to ARA Petroleum
Tanzania ("APT").

Announcing Significant Progress on the Completion of Ruvuma

 

As communicated via RNS on the 31 August 2022, the Company entered a binding
agreement with ARA Petroleum Tanzania ("APT") to divest its 25% non-operated
interest in the Ruvuma asset, Tanzania, for a total consideration of up
to US$16 million. Since then, the transaction has gone through multiple
stages of approval The Company has now 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 3(rd)
August 2023 representing a major milestone towards final completion.

 

Scirocco will now write 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 of 31 August 2023.

 

At completion, Scirocco expects to receive the balance of the completion
payment of c. US$2.5 million (equivalent to $3.0 million completion payment
less the $0.5 million advance received following signature of the agreement
with APT). Following completion, as a reminder to Shareholders, Scirocco will
then be entitled to receive a series of contingent payments which depend on
progress on the development activity of Ruvuma:

 

·      US$3 million payable upon Final Investment Decision (FID)
being by the parties to the Ruvuma Asset Production Sharing Agreement or the
JOA as the case may be. Given the progress made on the development to date,
with first gas being targeted for December 2023, Scirocco is confident of
receiving this payment later in 2023;

·      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. These
payments will be made following the sale of gas has commenced and based on the
current development timeline are estimated to commence in Q1 2024;

·      Contingent consideration of US$2 million payable on gross
production reaching a level equal to or greater than 50 Bcf. This will require
consistent production over a period of time from the licence and is unlikely
to be payable before 2025 at the earliest.

 

Commenting on the update, Scirocco's CEO Tom Reynolds said:

'It is very encouraging to have progressed to this stage in the transaction
and we thank the representatives of the TRA and our advisers for their
diligent work throughout the process. We are now working with our counterparty
APT to deliver the final approval from the Minister of Energy in order to
complete the transaction as soon as possible. Completion of the Ruvuma sale
will mark Scirocco's transition from an investor in cash consuming natural
resource assets to an investor in cash generative sustainable energy assets.
The expected cash payments from the sale significantly exceed Scirocco's
current market capitalisation and the Board is confident of being able to
deploy available capital into attractive platform companies such as EAG to
grow shareholder value over time."

 

ENDS

 

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
                                                     +44 (0) 207466 5000

 Buchanan, Financial PR

 Ben Romney / Barry Archer / George Pope

 

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.

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