Scirocco looks to higher return from Ruvuma potential

Scirocco Energy plc said it could receive higher contingent payments although possibly delayed from its Ruvuma interest, based on “enormous wider potential” from new data.

SEISMIC DATA

The increase is based on geomodelling of 338km^₂ 3D seismic data of the Ntorya gas field, which had “significantly” increased gas initially in place (GIIP) to 3.45 trillion cubic feet.

Project partner Aminex plc, with a 25% non-operated interest, said that the new data improves on the “sparse 2D database” and images a “possibly even larger area of gas charged reservoir sandstones, beyond the high confidence area established by the new seismic inversion modelling.”

Potential exists for additional prospective gas volumes associated with the Cretaceous age sand units tested in NT-1 and NT-2, units 1 and 2.

Aminex added there was also the possible existence of an as yet undrilled shallower sand unit of unit 3, which the Chikumbi-1 (CH-1) appraisal well will test later in the year.

An aggregated GIIP volume for the Ntorya accumulation, based on a success case in multiple stacked sands at CH-1, is estimated by APT to be up to 7.95tcf.

RPS has been engaged to revise its 2018 competent person’s report to support the initial field development plan.

Seismic interpretation by operator ARA Petroleum Tanzania also showed “considerable upside” for the Mtwara licence with total unrisked GIIP of 16.38tcf.

APT is awaiting award of the Ntorya development licence which will allow drilling of the CH-1 appraisal well, repair of a tubular leak in NT-1, further tests of NT-2 and support construction of a spur gas pipeline from Ntorya to the Madimba gas plant.

First gas production is targeting up to 60 MMscf/day from NT-1, NT-2 and CH-1 while the Tanzanian authorities have indicated that the spur line will complete during H1 2025.

TRANSFORMATIVE

Scirocco said that the US$3 million, payable upon final investment decision (FID), was on course for the end of Q1 2024 although possibly subject to delay.

Up to $8m payment to Scirocco in the form of a 25% net revenue share from when Ruvuma begins on delivery to the gas buyer looks to be delayed into H1 2025 compared with the previous expected date of late 2024.

There was also a consequent knock on timing to the payment of contingent consideration of US$2 million to Scirocco.

Outgoing chief executive Tom Reynolds added: “This update provides further confidence that we will realise the upside potential of our Ruvuma divestment through the contingent payments given the sheer scale of the project. 

“We note the delay to first gas which pushes back that first contingent payment into 2025 but the key takeaway for us is the progress towards the development of this high-quality asset, which in turn will provide transformative payments for Scirocco over time.”