Petroleum Africa
Find us on: 
Friday, May 26, 2023
Scirocco Energy and ARA Petroleum Tanzania (APT) have executed amendments to extend the longstop date of the proposed transaction from June 30 to August 31, 2023. Although Scirocco has continued to make progress with the Tanzanian Revenue Authority (TRA) regarding obtaining tax clearance for the divestment of Ruvuma, Scirocco and its counterparty agreed it was prudent to extend the longstop date given this process is taking longer than expected. Based on dialogue with local authorities to date, the Board is confident of achieving completion of the divestment within this extended timeline, though Shareholders should be aware, as previously announced, that completion cannot be guaranteed.
As previously disclosed by Scirocco, the operator, APT, is continuing to engage with Tanzanian authorities to finalize gas sales arrangements and the award of the development license for Ruvuma. This has the potential to accelerate an earlier development of commercial gas sales from Ruvuma than initially envisaged by Scirocco which would trigger earlier pay out of the contingent elements of consideration under the asset sale arrangements.
In addition to the expected gross completion proceeds of $2.5 million, the accelerated development process has the potential to trigger the FID contingent payment of $3 million within Q3 of 2023 as the JV moves ahead with the program, if approved.
The company also reports that the delay in receiving the authorization for the divestment, has in turn undermined Scirocco’s ability to support further acquisitions. “As a result, the previously announced planned acquisition opportunity for an anaerobic digestion plant in Southwest England will not proceed at this time, though may be resurrected, a Scirocco statement read.
Commenting on the update, Tom Reynolds, CEO of Scirocco, said: “We’re pleased to have amended the long-stop date to allow additional time for completion of the divestment of our interest in the Ruvuma Asset. While the process has taken longer than originally envisaged, we are encouraged by our dialogue with the relevant authorities in Tanzania and believe we are on track to complete within this new timeframe.
“Operational progress at Ruvuma points to the potential for an acceleration of the contingent elements of the gross consideration which would be transformational for Scirocco’s balance sheet, albeit not guaranteed. Until completion, cash preservation remains a core priority for the team and we have taken proactive measures to reduce G&A and safeguard the Company’s existing cash reserves.
“As a result of the delays to completion of Ruvuma, it is regrettable that we cannot support further acquisitions by EAG at this time. EAG continues to assess a compelling pipeline of opportunities consistent with its growth strategy and our expectations of a much-enhanced financial position within Scirocco later this year provides confidence that we can support EAG to execute value accretive deals in the second half of this year.”
" alt="First LNG Realized at the Greater Tortue Ahmeyim Project">
" alt="United Energy Acquires Western Desert Producer APEX">
" alt="Baker Hughes Announces Major Gas Technology Orders for Venture Global LNG">
" alt="ReconAfrica: Naingopo Results Demonstrate a Working Petroleum System">
" alt="Tullow Highlights 2025 Operational Plans in Ghana">
" alt="TotalEnergies to Supply 1.5 TWh to STMicroelectronics in France Over 15 years">
" alt="Rockhopper Reaches Final Settlement with United on Egypt’s Abu Sennan Concession">
" alt="Oil & Gas Crucial for African Growth: AEC Calls for Industry Support to Defend African Market">
