Completion of Ruvuma Divestment

Scirocco Energy PLC

16 October 2023

 

16 October 2023

Scirocco Energy plc

("Scirocco" or "the Company")

Completion of Ruvuma Divestment

Scirocco Energy plc (AIM: SCIR), the AIM investing company targeting attractive assets within the European sustainable energy and circular economy markets, today announces an update on the Ruvuma transaction.

Scirocco is pleased to announce it has completed the transaction with ARA Petroleum Tanzania ("APT") for the divestment of its 25% non-operated interest in the Ruvuma asset, Tanzania.

In accordance with the SPA, Scirocco has received the balance of completion payment consideration of $2.54 million (equivalent to $3.0 million completion payment less the $0.5 million advance received following signature as well as contractual adjustments). The cash call loan facility provided by APT and used by Scirocco to fund cash calls during the interim period has also been fully settled by completion and Scirocco has no ongoing associated liability.

Following completion Scirocco will 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, Tom Reynolds, CEO of Scirocco, said:

"This is a transformative divestment for Scirocco and we are delighted to have reached this watershed moment for the company as we complete our transition to a business positioned to take advantage of opportunities in the growing energy transition sector which match our strategic investment mandate. 

I would also like to thank the representatives of the Tanzanian government who have supported the completion process.

With Scirocco's exit from the significant legacy investments of what was Solo Oil, this will broaden the appeal of our investment proposition amongst a significantly wider pool of prospective investors, and we look forward to forging a new profile as a focused and ambitious company, motivated to create sustainable long-term value and contribute to net-zero targets.

The receipt of the initial consideration, and even more so upon receipt of the future contingent payments, places the Company on a solid financial footing to explore and evaluate opportunities in line with the strategic focus on the energy, circular and vector sectors.  The Company looks forward to engaging with shareholders regarding our next steps."

For further information:

Scirocco Energy plc Tom Reynolds, CEO	[phone]
Strand Hanson Limited, Nominated Adviser Ritchie Balmer / James Spinney / Robert Collins	[phone]
WH Ireland Limited, Broker Harry Ansell / Katy Mitchell	[phone]
Buchanan, Financial PR Ben Romney / Barry Archer / George Pope	[phone]

 

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