Ruvuma Operational Update

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/

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 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 / George Pope	[phone]

 

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