Ruvuma Transaction Update – Tax Clearance Received

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 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]

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.

 

END