TIDMSCIR
RNS Number : 6845K
Scirocco Energy PLC
09 May 2022
9 May 2022
Scirocco Energy plc
("Scirocco Energy" or "the Company")
Investments 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 investments:
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 Q1 2022 the revenue received for the quarter by GGL totalled
GBP323k (unaudited) supported by high power prices through the
period. This compares to the same period in 2021 where revenue was
GBP240k (unaudited) - a 34.5% year on year increase. EBITDA for Q1
2022 was GBP158k and at current power prices, EBITDA for the first
12 months of EAG's ownership of GGL is on target to exceed
GBP600k.
Operational
During Q1 2022, in order to future proof the plant at its
Greenan site, the EAG team completed the replacement and
recommissioning of a number of elements of critical equipment, at a
total cost of c. GBP230k funded from operational cash flow:
-- all mixers in the premix tank
-- all primary digester mixers, and refurbishment of all mixer
infrastructure including winches, winch motors and guide rails
-- Full Edina CHP (Combined Heat & Power) engine block change, and completing major service
-- Upgrade and replacement of augers and pumps in feed and
recirculation system including installation of automatic
recirculation system
Other than some minor planned upgrades, and preventative
maintenance which is contracted long term with service providers,
there are no further major upgrade projects planned in the next 24
months. Following these upgrades, and the recommissioning of the
CHP, the plant is expected to operate at over 95% efficiency for
the foreseeable future, with no further downtime.
Business Development
From a business development perspective, EAG is currently
carrying out due diligence on three 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 up to seven merchant installations of the SEM equipment
on third party AD plants. This is in addition to the planned
nutrient recovery system at Greenan, which is expected to increase
EBITDA for the entire Greenan complex to c. GBP1,500k per annum
once operational.
Tom Reynolds, Scirocco Energy CEO commented :
"I am delighted with the progress made by the EAG team on all
fronts during the first quarter with strong operational performance
on EAG's current asset and the development of a very attractive
list of follow-on investments.
The investments targeted by EAG seek to deliver two valuable
resources: sustainable energy from biogas and sustainably sourced
organic fertiliser. EAG has positioned itself in two very exciting
markets and we look forward to supporting the company's growth
going forward.
With respect to funding, the Scirocco team has been
investigating parallel funding options which would support the pace
of capital investment into EAG operated projects while reducing the
call on Scirocco's balance sheet in the near term."
Tanzania Operations
As communicated to the market in an RNS on 8 April 2022,
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"):
-- Progress continues to be made by the contractor Africa
Geophysical Services Limited ("AGS") to acquire approximately 338
km(2) of 3D seismic data focusing on the primary area of interest
including the Ntorya discovery. The Joint Venture intend to
complete this acquisition and early processing of the data ahead of
spudding the Chikumbi-1 well ("CH-1").
-- APT has further advanced the well planning for the CH-1 well
with all long lead items contracts now executed
-- APT reports a target spud date for the CH-1 well in November 2022
-- 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), and a
prospective, risked recoverable gas resource of 1,990 Bcf (gross
basis, mean case) considerably in excess of the Joint Venture's
carried resource assessment
As per the Tanzania Operations Update issued to the market on 8
April 2022, the operator (Aminex) of the Kiliwani North Development
Licence ("KNDL"), in which Scirocco holds an 8.39% working
interest, noted that any future drilling is contingent upon an
improved seismic resolution of the prospective target
structures.
-- The operator has reached an agreement with Pan African Energy
Tanzania ("PAET") to utilise their high-resolution 3D seismic
campaign, targeting a mid-year start, to receive approximately
12.5km(2) of valuable new high-resolution 3D coverage over KNDL, at
no cost to the Kiliwani North joint venture
-- This coverage, which represents over 40% of the critical area
of the licence, will enable the operator to link the new
high-resolution 3D data to its existing 2D seismic legacy data
which currently covers the KNDL with an irregular seismic grid.
This should significantly improve both fault resolution and
reservoir horizon mapping
Commenting on the update, Tom Reynolds said :
"Ruvuma Operator APT continues to move the work programme
forward to better characterise and enhance understanding of the
potential resource, and we remain excited about the schedule of
work on our Tanzanian assets as we approach key operational
milestones.
As previously communicated, the Company is progressing
discussions and exploring options with interested parties for
possible divestment and/or farm-down of Scirocco's interest in both
assets, while maintaining our funding options in the event we
retain our 25% interest in Ruvuma at the time of drilling CH-1.
The priority of management remains to progress the ongoing,
material discussions on the sale of the company's interest in
Ruvuma, to remove the funding requirement and to achieve our stated
strategy to pivot to sustainable energy and circular economy
markets, where EAG represents a robust, scalable platform primed
for growth in an exciting sector.
We look forward to providing further updates to the market 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
Tom Reynolds, CEO +44 (0) 20 7466
Doug Rycroft, COO 5000
Strand Hanson Limited, Nominated Adviser +44 (0) 20 7409
Ritchie Balmer / James Spinney / Rory Murphy 3494
WH Ireland Limited, Broker +44 (0) 207 220
Harry Ansell / Katy Mitchell 1666
Buchanan, Financial PR +44 (0) 20 7466
Ben Romney / Jon Krinks / James Husband 5000
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END
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