(Alliance News) - Scirocco Energy PLC announced on Monday it entered into a conditional binding agreement with Wentworth Resources PLC to divest its 25% non-operated interest in the Ruvuma gas development project in Tanzania.
Shares in Scirocco were up 7.3% at 0.46 pence on Monday morning in London while Wentworth Resources shares were up 1.7% at 25.42p.
The divestment is for up to USD16 million, with an initial USD3 million consideration payable on completion and another USD3 million payable upon a final investment decision being taken relating to the Ruvuma asset production sharing agreement.
A deferred consideration of up to USD8 million is payable in the form of a 25% net revenue share from when Ruvuma commences delivery of gas. A further USD2 million is payable contingent on gross production reaching a level equal to or greater than 50 billion cubic feet.
Scirocco said the consideration represents triple its current market capitalisation and will remove the imminent need to raise capital to fund the Ruvuma work programme.
The company will also receive a loan of up to USD6.3 million from Wentworth to meet all cash calls relating to its Ruvuma joint operating agreement.
Scirocco Chief Executive Tom Reynolds said: "This is a transformative deal that follows lengthy engagement with Wentworth and a two-year sales review process. The deal enables Scirocco to crystallise firm value from this asset which can be deployed into compelling opportunities in line with the company's strategy to focus on opportunities within sustainable energy and the circular economy."
By Heather Rydings; heatherrydings@alliancenews.com
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Scirocco Energy (SCIR)