Operations Update

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 338km² 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 Tom Reynolds, CEO Doug Rycroft, COO	[phone]
Strand Hanson Limited, Nominated Adviser Ritchie Balmer / James Spinney / Rory Murphy	[phone]
WH Ireland Limited, Broker Harry Ansell / Katy Mitchell	[phone]
Buchanan, Financial PR Ben Romney / Jon Krinks / James Husband	[phone]

 

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