TIDMSCIR
RNS Number : 4974P
Scirocco Energy PLC
18 February 2021
18 February 2021
Scirocco Energy plc
("Scirocco" or "the Company")
Strategy Update and Board Changes
Scirocco Energy (AIM: SCIR), the AIM investing Company targeting
attractive production and development opportunities within the
European energy market, is pleased to provide a strategy
update.
Highlights
-- In March 2019, Scirocco Energy announced the launch of a new
strategy to create long-term, sustainable value in European energy
market.
-- In a further development in its strategic focus, the Company
confirms that it has identified various near-term investment
opportunities within the low-carbon space, including renewable
energy, circular economy and energy storage and transfer.
-- Target acquisitions under review are consistent with the
Company's goal of acquiring cash generative investments within the
European energy market whilst broadening the target market and
improving risk/reward.
-- To support this increased focus within the low-carbon space,
the Company announces the appointment of Mr. Muir Miller as an
Independent Non-Executive Director, adding specialist experience to
support this strategy development as Scirocco moves into the
execution phase.
Strategy overview
While the current portfolio remains a key focus of the Company
as it progresses efforts to realise full value from those
investments, the Board believes the evolution of its strategy will
better enable long-term value creation for its shareholders. The
additional areas of investment being screened represent a
compelling market opportunity, with strategically consistent assets
that complement Scirocco's ambitions to be part of the energy
transition space, as the world looks to embrace a more sustainable
energy future.
In particular, Scirocco is presently focused on three core areas
of investment:
- Energy - assets which generate energy for sale as gas/biogas or power;
- Circular - assets which recover a valuable component of an
industrial, municipal or agricultural waste stream for re-use,
generally reducing system carbon footprint; and
- Vector - assets involved in the storage, transmission or
delivery of energy within a low carbon context.
The Company's goal is to acquire a focused portfolio of cash
generative assets within the sustainable energy and circular
economy sector. By constructing a portfolio within this space, the
Board believes it will offer shareholders and investors exposure to
cash generative investments with an attractive risk/reward ratio
within the sustainable energy ecosystem and the ability to deliver
shareholder value through dividends and capital growth.
The Company is in advanced dialogue regarding its first
transaction in the sustainable energy space through the acquisition
of an energy generation asset and is actively progressing with the
due diligence process. Whilst there is no guarantee that the
transaction will complete, the Board is reassured by the progress
to date and will update shareholders and the market in due course.
Any investment will be conditional upon shareholder approval being
obtained for a change in the Company's investing policy. Further
updates on convening the necessary general meeting will be made as
and when appropriate.
The Board will continue to consider compelling opportunities
around natural gas given its prominent role within the energy
transition as a bridging fuel. However, with an increased focus on
business development within the low-carbon space, the Board is
setting new targets based around total shareholder return on
deployed equity within relevant assets rather than the previously
set hydrocarbon production targets. Based on the pipeline of
opportunities within its new area of focus, the Board is targeting
an enterprise value invested asset base of GBP150 million, capable
of generating cash flow of circa GBP20 million per annum, within
five years.
Appointment of INED
As part of this strategy development, the Company has appointed
Mr Muir Miller as an Independent Non-executive Director with
immediate effect. He is a Chartered Engineer and Member of the
Institution of Mechanical Engineers with over two decades of senior
executive experience, with particular focus on the renewable energy
sector. Most recently, Mr Miller was Managing Director of Peel
Energy, part of the privately owned, diverse and entrepreneurial
Peel Group, a leading infrastructure, transport and real estate
investor in the UK, with collective investments owned and under
management of more than GBP5 billion. Peel Energy is an agile low
carbon development company that is active in a number of technology
sectors with the capacity to develop, build, own and operate
assets. During a 10-year period, Mr Miller lead a team that
developed and sold GBP121 million of assets without requiring any
long-term equity investment from Peel Holdings, clearing over GBP61
million in cash profit.
Prior to joining Peel Energy, he was Business Development
Manager at Energy Power Resources, with an installed capacity of
113MW of dedicated biomass assets, 70MW of landfill gas assets, and
100 MW of wind assets in France, UK and Sweden. Between 2005 and
2007, Mr Miller was CEO of Novera Macquarie Renewable Energy, a
joint venture with annual turnover of GBP32 million and one of the
largest independent renewable energy operators in the UK with a
total installed generating capacity of 117.5MW across 53
geographically diverse sites.
Mr Miller will chair Scirocco's Sustainability Committee which
is in the process of being formed.
Additional information on Mr Miller, pursuant to paragraph (g)
of Schedule Two of the AIM Rules for Companies, is set out
below.
To coincide with the appointment of Mr Miller, and in line with
Scirocco's commitment to cost discipline and maintaining an
appropriately sized board, Mr Fitzpatrick has notified the Company
of his intention to stand down from the Board and, in any event,
that he will not seek re-election at the Company's annual general
meeting this year. Mr Fitzpatrick has played an important role in
the establishment of Scirocco and remains a material and supportive
shareholder.
Corporate Update
The Company continues to review its legacy portfolio, looking at
the best way to maximise shareholder returns with the existing
assets representing significant as yet unrealised value.
The recently completed transaction between Aminex and ARA
Petroleum validates the commerciality of the Ruvuma project and
brings in a well-capitalised and experienced operator to drive the
project forward. ARA is presently progressing plans for the 2021
seismic acquisition programme including the tendering and
contracting work and for the drilling of the Chikumbi-1 well in
early 2022. Both of these activities will significantly advance the
asset towards a final investment decision on field development
which the joint venture aims to take in late 2022, targeting first
gas by 2025. The Board looks forward to updating shareholders as
progress is made on delivering the development programme at the
Ntorya gas discovery in the Ruvuma PSA.
Scirocco continues to engage with multiple parties who have
expressed interest in its non-operated stake in Ruvuma alongside
the Company's wider Tanzania portfolio. A formal sales process
covering the portfolio commenced in Q1 2020, as announced on 2
March 2020, following the confirmation by the Tanzania authorities
of the licence extension. This process led the Company to execute
non-disclosure agreements with interested counterparties who have
reviewed the material available in the data room. Progress was
delayed by the ongoing restrictions associated with COVID19 and the
anticipated completion of the APT / AEX farm-in, which completed on
23 October 2020.
Following this, a revised work programme was submitted to the
Tanzanian authorities and the activity path to progress the asset
towards commercialisation has been agreed between the Joint Venture
partners. These critical steps have been the trigger for
re-engaging discussions and the Company is engaged in advanced
dialogue with a number of interested parties on a sale of its
Tanzanian natural gas assets. The Company continues to be the
recipient of unsolicited expressions of interest and has received a
number of indicative proposals for its Tanzanian assets which it is
considering. Whilst there is no guarantee that any divestment
transaction will complete, the Board is extremely encouraged with
the progress of discussions and will update shareholders and the
market in due course.
Commenting on the update, Alastair Ferguson, Chairman of
Scirocco, said:
"Both the energy and capital markets have changed considerably
since this Board set its original strategy around European Energy
almost two years ago. The combination of an abundance of compelling
opportunities and wider investor appetite in the low-carbon space
with an improved risk-reward ratio has resulted in us increasingly
focusing our business development in this area. We are presently
screening a pipeline of opportunities around which we believe we
can grow the business and deliver sustainable shareholder value
underpinned by steady cash flow, reliable dividends, and a positive
ESG story. Scirocco is wholly supportive of energy transition and
it is our ambition to be a part of that long-term movement.
We retain investments in hydrocarbons, notably our 25% interest
in the world class Ruvuma gas discovery in Tanzania and continue to
progress discussions as we seek to unlock and realise the inherent
value of that investment.
With regards to the Board changes, we thank Jon for his
considerable contribution to the Company in recent years which has
been pivotal in stabilising the business and getting it to a
position where we can deliver long-term growth. We welcome Muir to
our Board and look forward to adding his experience to the pool of
renewables experience we possess. Muir has a proven track record of
strategic direction, business plan execution and successful
delivery of low carbon assets, so we will benefit from his
considerable experience as we progress our strategy within this
area. Muir will head up our newly established Sustainability
Committee that will be responsible for developing an effective ESG
strategy that supports our growth ambitions."
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
James Spinney / Ritchie Balmer / Rory Murphy 3494
WH Ireland Limited, Broker +44 (0) 0207 220
Harry Ansell / Katy Mitchell 1666
Buchanan, Financial PR +44 (0) 20 7466
Ben Romney / Kelsey Traynor / James Husband 5000
Additional Information on Mr. Muir Miller (Aged 66)
Current Directorships Past Directorships
Ayrshire Power Holdings Limited
Ayrshire Power Limited
Ener-Vate Holdings Limited
Frodsham Wind Farm Finance Limited
Frodsham Wind Farm Holdings
Limited
Frodsham Wind Farm Limited
Mersey Heat Limited
Moorland Wind Holdings Limited
Peel Finance (UK) Limited
Peel L&P Group Management Limited
Peel L&P Scout Moor Services
Limited
Peel L&P Wind Farms (Asfordby)
Limited
Peel L&P Wind Farms (Plenmeller)
Limited
Peel L&P Wind Farms (Projects)
Limited
Peel L&P Wind Farms (Seaforth)
Limited
Peel NRE Developments Limited
Peel NRE Energy (Barton) Limited
Peel NRE Holdings Energy (No.3)
Limited
Peel NRE Solar PV (DSA) Limited
Peel NRE Solar PV (LJLA) Limited
Peel NRE Wind Farms (FIT) Limited
Peel NRE Wind Farms (No. 1)
Limited
Peel NRE Wind Farms (Yell) Limited
Peel Wind Farms (Management)
Limited
Peel Wind Farms (Sheerness)
Limited
Port of Sheerness Wind Farm
Limited
Scout Moor Wind Farm Expansion
Limited
Seaforth Windfarm Limited
There is no further information to be disclosed pursuant to
paragraph (g) of Schedule 2 of the AIM Rules.
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