Member Info for holyroller

Since I am no longer allowed to voice an opinion on this board I am just going to state some facts that are in the pubic domain and let you all make of them what you will when you consider the abstract question about parties working together while pretending that they are not.

Solo/ Scirocco RNS releases
• 14/03/2018 – Jon Fitzpatrick issues TR1 for 3.67% at Solo https://www.lse.co.uk/rns/SOLO/holdings-in-company-uln60i9gf3tzjsa.html
• 2/5/2018 – Jon Fitzpatrick appointed as non-exec director of Solo https://www.lse.co.uk/rns/SOLO/director-changes-2pkg538px0i869r.html
• 6/8/2018 – Alistair Ferguson appointed chairman and Gneiss Energy appointed as corporate advisor https://www.lse.co.uk/rns/SOLO/board-appointment-e1mbjqsjgovn86d.html and https://gneiss.energy/news/page/11/
• 8/8/18 – Ferguson buys 2.13% https://www.lse.co.uk/rns/SOLO/board-changes-and-directors-dealings-8bbc712hnorbrgc.html
• 14/9/2018 – Fitzpatrick increases his holding to 4.45% https://www.lse.co.uk/rns/SOLO/directorpdmr-shareholding-yglec1a7u3gsi4q.html
• 4/12/2018 – Tom Reynolds appointed as non-exec director. https://www.lse.co.uk/rns/SOLO/director-appointment-xu0hucl63hdhey0.html
• 14/7/2020– Ferguson ups stake to 3.76% https://www.lse.co.uk/rns/SOLO/holdings-in-company-jnyf0vhkm927sft.html
• 9/10/2020– GP Jersey buy 3.24% https://www.lse.co.uk/rns/SOLO/notification-of-major-holdings-tkgxcuknwemtedy.html
• 19/10/2020 – GP Jersey up stake to 8.51% https://www.lse.co.uk/rns/SOLO/notification-of-major-holdings-2rhyecn2p8x8nif.html
• 16/11/2020– GP Jersey up stake to 9%. https://www.lse.co.uk/rns/SCIR/notification-of-major-holdings-k9a5mn7p79swfe7.html

On Tuesday 6th July I wrote a number of posts relating to the attempted executive takeover that has been in progress at Block Energy since the AGM. These detailed a number of the players who are behind this action and their track record of performance at other companies in which they are in control.

Later that day my posts, which were backed with evidence from the public record in company accounts and RNS releases were deleted and my account was suspended until today for posting “defamatory comment”. I am very unhappy about this and have no idea why it happened. The posts were researched in detail and substantiated with evidence taken from company annual reports, official company RNS releases and public news announcements.

It is clear to me that certain individuals involved in this corporate action do not want investors to know that they are associated with it and are monitoring this board and pressuring LSE to delete anything that does not portray them in the light that they would wish to be seen (or not be seen).

This is totally ridiculous. It is outright preventing us independently discussing what is clearly a major tipping point in the company’s future as while we can criticise the existing board with impunity, the moment that we write something that is not in favour of the proposed resolution and its allies then it appears to get deleted.

I have done significantly more research than I have posted on here so far but I feel that there is very little point in writing it up in post form if it is just going to be deleted because it is critical of those backing the corporate restructure.

As I have made very clear, I intend to vote firmly against the GP Jersey resolution. I have noticed this week that a substantial number of others seem to agree with this position. This being the case I would like to put together an organised group of likeminded (anti-GP Jersey) investors to vote against this resolution and to be able to discuss freely (without censorship) the implications of what may happen in the event of GP Jersey being successful in this resolution.

If you are interested in joining then please get in touch on twitter at https://twitter.com/Only1Holyroller or at: Againstgpjresolution (at) outlook (dot com).

Let's make sure that the futrure success of Block Energy will benefit all shareholders and not just a mysterious and powerful few. If my account gets suspended again then please contact me via email or social media.

Thanks you for all your kind comments. I hope that we at Scirocco can finally manage to extract the value that we deserve out of our Ruvuma asset and I hope for all of your sakes that Fitzpatrick and Ferguson don’t manage to get full control of your company the way that they did of ours.

Some of you mentioned about being worried that your directors were doing the same thing with Block and Plutus Strategies as Fitzpatrick does with SCIR and Gneiss. There is actually an easy way to find out.

The key part to look for when directors are really milking everything that they can out of a company is in the annual report under “related party transactions”. There are a myriad of ways for directors to hide things in an annual report but the “related party” section is pretty black and white and there is no excuse that they can offer to the regulators if they are caught ignoring it – so it is one place that they have to be truthful.

Any payments made to Plutus Strategies by Block would have to be declared in the annual report as a related party transaction. I have had a quick look at the 2017, 2018 and 2019 annual reports for Block to check for these. It was esay to do, I just searched for “Plutus”.

In the 2017 annual report it says that in March 2017 Plutus were paid £2,500 for consultancy fees and £20,000 for brokers fees as well as receiving 658,234 2.5p warrants in Block as part of the subscription for Taoudeni Resources.

In 2018 there were no related party transactions involving Plutus.

In the 2019 annual report is says that Plutus were paid 977,383 shares at 15p for a deferred consideration for the purchase of Taoudeni Resources. They said that this was covered by an explanation in the AIM admission document.

The short answer from my (very quick) look into the annual report is that Plutus were paid some fees in shares for a transaction that appeared to take place prior to Block’s listing on AIM. I assume that some of you lot will know what the Taoudeni Resources transaction was for and why Plutus got paid from it but Plutus have certainly not takien any ongoing fees for services to the company since it has listed. So they are by no means the same as Gneiss.

I am off back to my own investments now, but given what some of you have posted about the potential here I may have a bit of a deeper dive into researching Block and you never know I may return one day as a fellow shareholder. Until that day comes GLWYI.

Being a non-exec director of Scirocco has also been extremely lucrative for Fitzpatrick personally as he has taken out £196,000 in directors fees for 2018 and 2019. It should be noted that these are fees for being a non-exec director and as such they are incredibly high. To give an idea of what I mean by high, all three non-execs at Block put together were paid £132,525 ($182,167) for their fees for the 30 months between June 2017 to December 2019 and Fitzpatrick got paid nearly a third more than all three of them did put together for just two years work.

This is all just the tip of the iceberg really. On top of this there are questions about the amount of share options that the directors have issued themselves, the amount of company money they have wasted on their failed takeover attempts and the amount of debt that has been introduced to the company on their watch. This has even led to calls on the forums to try and organise an EGM to do something about it.

As I say, it is not really any of my business as I am not invested here, but I would seriously be careful what you wish for if you want to replace your existing management with the lot who run Scirocco. You may not think that things can get much worse but imagine if a new management team came in and started:

selling your existing assets without replacing them;
massively increasing the administration expenses;
bringing in their own private company to charge the company hundreds of thousands of pounds each year for unidentified “advisory services”;
racking the company up with debt;
being very vague about how you intend to pay for your share of costs for the development of your most valuable asset, potentially leaving you having to sell it for a discount.

You may just wish that you had stuck with the devil you know…

As a significant investor in Scirocco I occasionally come and look at this board since the two companies, unfortunately for both, share some significant investors in common. Last week I noticed a particular investors on this board mentioning that you think that you might be better off under new management and stating that he thought that “if the BOD and the scottish contingent had updated the market with the current news the sp would be flying. It isnt, its dying slowly and now under placing price.”.

I have not posted on the Block board to this point as I am not a shareholder here but before the idea takes hold that you would in any way be better off under the management of Alistair Ferguson and Jonathan Fitzpatrick, let me point out to you some of the things that have happened to Scirocco under their watch.

Since Fitzpatrick and Ferguson took over at Scirocco back in May 2018 they have managed to sell a significant chunk of the company’ assets, ramp up its debt and channel large amounts of company money out to Fitzpatrick’s advisory company Gneiss Energy. They have raised about £5 million from the asset sales but this all appears to have been used up and as of their last update in December 2020 it appears to have left Sciroccos without the money to fund their share of liabilities for the continued development of the Ruvuma asset even with the death spiral financing that they currently have in place with Bergen.

Since they took over Fitzpatrick & Ferguson have increased the amount of administrative expenses by £600k every year - from 2017 (pre-their control) when it was £1.2 million per year to 2018 when it was £1.9 million per year and by 2019 it was up to £2.5 million per year. God knows what they will be in 2020 when those results are released in a few months time.

The private company that Fitzpatrick owns with his wife, Gneiss Energy, has been paid £1.3 million in fees from Scirocco according to the 2018 and 2019 annual reports for what is described as “provision of management services” in 2018 and “provision of corporate finance advisory” in 2019. Despite at least one public request that I know of from Scirocco shareholders the company have refused to publicly say what these fees were for. One thing that we do know though is that on 31st October 2017 the only employees of Gneiss Energy were Fitzpatrick and his wife, but by 31st March 2019 there were 8 and by 31st March 2020 there were 11. So being in business with Solo/Scirocco has definitely been good for Gneiss Energy even if has not been so great for Scirocco.

I always said that Jonathan Fitzpatrick was a total liability whose only skill-set is bleeding the company dry through his awful Gneiss consultancy. What’s the betting that he was finally told that the conflict of interest was too great and he had to jump before he was pushed as the image of him taking a huge wage and also sucking vast amounts of cash out via via Gneiss became too much for even Ferguson to bear?

However, this is a just a powder-puff PR move. By him dropping off the board then this means that we no longer get to see Gneiss as a related party transaction in the annual accounts and that hides how much money the company is spending with Gneiss even more effectively.

Our next set of annual accounts will be out soon and I bet we will find that Gneiss have once again massively overcharged for their services and taken money out of Scirocco that the company can ill-afford to lose. This is probably why this has been done now – so this will be the last year that they have to face such a massive conflict of interest publicly.

Make no mistake though, as long as Gneiss are intimately embedded in the company and subbing their staff out to high ranking positions such as COO in Scirocco Fitzpatrick will almost certainly still be acting as a shadow director and pulling strings behind the scenes. His number one priority will definitely be to ensure that Gneiss are still milking every drop of profit out of Scirocco that they can as this is where he makes his real money. The £62,000 directors fees are nothing to him compared to the £500k-£750k that Gneiss bills Scirocco every year.

The only way that Scirocco will ever be truly free of Fitzpatrick and his money-grabbing ways is if we get the announcement that Gneiss no longer have anything to do with the company. Until then, the money will still be moving out of the company pockets and into Fitzpatrick’s.

But him going is a good start. Now we just need to get rid of Gneiss and bring on a new board who actually want to deliver value for shareholders rather than just themselves.

If we get an announcement that Gneiss are out soon too then I think that we may genuinely turn a corner in shareholder value and then I will open the champagne! However, him going is a baby-step towards a better future and I will definitely raise a small beer to his departure tonight.

As a new poster I want to be completely clear with existing holders. I am not currently invested in Zenith. I like the look of the Tilapia asset and I am looking at making a couple of investments into high risk small-cap companies to go alongside the more blue chip dividend payers and cryptocurrencies in my portfolio. However, what I have found is that it is never enough for a company to just have good assets - they also have to have a good and dedicated board of directors and the ability to fund their assets.. This is what I am researching in Zenith before taking the plunge into investing my money.

My main small cap holding is SCIR who have a fantastic asset in Ruvuma in Tanzania but it is run by an absolutely useless BoD who have no deal-making abilities, they lost millions on a failed gas deal. Since then they have just seemed to want to drain as much money as possible out of the company by charging sky-high directors fees and using private consultancies to charge millions in additional services fees. The company also cannot actually finance their 25% of Ruvuma even with the death-spiral financing that they have in place so it is likely that they are going to simply sell the asset for whatever they can get for it and then a lot of the profit will disappear into fees to “related companies”. It has been a bit of a disaster of an investment to be honest, but I have made good profits in my crypto investments and am hanging on in at SCIR because I do think that under a different board things could be different.

So for my next project I am looking for a company where the interests of the directors are aligned with the interest of the shareholders and where it is likely to be able to sensibly fund exploration activities without diluting shareholders too much. So far I like what I see of ZEN. I do not mind having a deal maker at the helm as I think that it is easier to get operational people on team than it is to get deal-makers. I also like the fact that Andrea Cattaneo spent four months in the Congo getting the Tilapia license renewed (I doubt the SCIR crew have been to Tanzania for more than a week in their lives) and I also like fact that they have $5.7 million owed to them which they can finance a new well with. I have a bit more research to do before parting with my money but but I do like what I see so far.

WRITE UP PART 6

So basically it is being in the right place at the right time when there are opportunities to take?

Absolutely. You have to remember that in recent years these opportunities were made available from Shell in Nigeria but the cost of purchasing these fields were around $200 million which would be an impossible financing burden for a junior oiler. Now, instead, these fields are even returned for free to the governments and the government needs to find an operator immediately because they are quite sizeable productions and not many operators are already accustomed and French speaking (as we are) to take these fields that are returned to the government.

Andrea – you mentioned that you are travelling back to the Congo soon. How long are you planning to spend in Africa for the operations but also to develop these relationships? Many CEOs don’t spend any time on site and in reality being on the ground is a key element for an energy company?

I hope that this interview is not seen by my family members but my view is that in this special period of opportunities and challenges then the answer should be “as long as it takes”. When I made my last visit to the Congo I arrived on September 1st and I planned to return long before Christmas. However, he construction of a proper settlement into the country’s roots of oil and gas and building relations has taken so long that I had to spend almost 4 months into the country.

It will be the same if we do something in Angola or other countries nearby. We will have a need to stay in the place and create a real network of relationships to build the credibility that can only be established with a physical meeting especially in a country that is as personal as Africa.

WRITE UP PART 5

Let’s talk about Tunisia – when will the two deals you have done receive regulatory approval?

This double transactions (as they are two stakes in the same field) may be approved at any time but the problem has been with the volatility within Tunisian politics. Various governments and ministries have been created and then dismissed and this has created a huge delay in the state body that should give the final stamp of approval. So we have no visibility except to say that our local advisor says that it could come through any day – but unfortunately this position has the same for the last three months and so we do not know exactly when it will happen. We do expect that it will be soon though as the political observers know that this delay creates a negative impact in the O&G development of the country which is very important for employment and GNP for a long-suffering country. Nevertheless Tunisia has been the darling of value for junior companies from abroad (Canada, England, Holland and Norway) as well as some state companies.

Can you tell us more about your JV agreement signed for the MNA region?

In 2021 Zenith plan to take advantage of the challenges that are coming out of Covid for major and mid-tier companies. Our vision at the start of 2020 has been fully confirmed by what is happening today as various majors are closing marginal fields (even fields that can do thousands of barrels per day) in Africa and elsewhere because of the constraints of Covid.

The system of a lot of the large companies is to use rotation of their managers who mainly come from North American and Europe. This rotation is done by flying every 28 days from the working site at the oil field into their residence in their countries. Now because of the Covid situation some of these people such as those from the UK and USA have tremendous difficulty in reaching their destination and their companies have to find substitutes. When these people come from centres of high Covid transmission then they need to go into quarantine which increases the rotation from 28 days to a paid rotation of 45 days or more. This both complicates and sometimes makes uneconomical the management of expensive fields for small quantities of oil. When I talk about small quantities I mean anything below 12,000 bopd. So this is a key of our policy – being near to majors like we have done with SLK and showing that we are very credible in delivering payment and making it easy for them to deliver to the new owner (us) of the property that they want to dispose of. All of that is a process that can have the ability to bring us to 18,000-20,000 bopd in 12-18 months.

The simple calculation is that if we only take two fields that average 8,000-9,000 bopd we will go to 16-18,000 bopd from 1,000bop and the difference will be huge in terms of market perception and market capitalisation. We are only one step from this level.

WRITE UP PART 4

Strong resilience and perseverance which is very important. You have got to a stage now where it looks like you are discussing various opportunities. Can you tell us about your JV agreement for a second asset in the Congo?

Certainly. It is not only in the Congo. This transaction through various articles and rumours has become quite popular in the area and everyone speaks about the attacks against Zenith and eventually Zenith taking revenge and winning. This has given empathy and even confidence to various other entities in Congo and elsewhere. In Congo we are already discussing our second and possibly third and fourth assets. We have also recently received emails from ministries of other countries congratulating our success and saying “please come to visit us”. So while 2020 has been a very bad year for everyone because of Covid it has been especially bad for us as we have had every sort of ex-employee, ex-manager, ex-shareholder and ex of ex (joke) which have attacked us as they were jealous of how big the Tilapia opportunity was and they would all list only a few of the advantages that we have got.

The advantages are:

1) We bought the asset for a minimal price.
2) Attached with this we have $5.7 million receivable from the state oil company which I am sure will be paid.
3) The goodwill. We are not taking a fresh opportunity but rather a ripe opportunity that everybody would like to have because with small drilling activity we can go into a successful large production. Of course, there is still the mystery of the underground and nothing is done in oil and gas until you have the flow in front of your eyes. So we cannot count 100% on success but the percentage of probability is hugely increased in this case compared to the average situation.

You mentioned the repayment of the $5.7 million – when are you expecting that and what would you use it for?

We would use the money for general company purposes but probably in our African activities to reduce our need to raise capital by issuing shares. As you know this is something that we were quite bad with in the in the first months of 2020 in the middle of Covid but then we have been very good in the second part of the year and up to now because there has been is a long period where we do not make private placements and everyone is quite impressed with this new attitude from Zenith.

WRITE UP PART 3

Can you expand a little more on the process of getting the license and what did you go through?

The past has been terrible. Since we made this acquisition of the Congolese subsidiary (of AAOG) we have had all kinds of competition and all kinds of challenges and all kinds of bad-mouthing and I have never seen such a ferocious challenge to a small cap company’s aspiration. We have faced all kinds of defamation, blackmail, false emails and letters to the government of the Congo. So we have been very robust in staying in Congo and by this the management presence showing who we are: morally, internationally and institutionally supported and we have convinced the govt of Congo that despite all of the negative messages received from our competitors we were the right candidate for the license. This is all happening now but it has been practically 7 months work from April to November to get here. We have seen the light in December with the news release that has re-established our stock price. However this price is still much below what it deserves to be for shareholders who have seen their stock deprived of its real worth between March – mid December. The negative comments and defamation did damage us but in the long run we have beaten them. So I am very proud of our resistance, our stamina and also of our true values that eventually emerged to the Congolese authorities – who I would like to thank for their investigation and understanding to uncover the truth in this case.

WRITE UP PART 2

What are the next steps for achieving the 25 year license?

After the approval of the IPU the license should then proceed to the signing of a Production Sharing Agreement (PSA) and then the PSA goes to the cabinet of ministers to be ratified and then after that it goes to parliament for the final ratification and to be passed into law. In the meantime while these bureaucratic steps are fulfilled, we are preparing to send our own rig into the Congo and then preparing to drill as soon as we are officially operator.

The history of Tilapia is that we made a deal for it in 2019 and it was immediately challenged by many others who had become aware of the beauty of this opportunity and challenged us for it. This is because the well is nearly drilled – only a few hundred meters still to drill so there is the need for completion only. But the (Djeno) structure is extremely promising as nearby all over the area of Point Noire this structure has produced 1,000 bopd everywhere it has been drilled.

Everybody knew what the potential of Tilapia was but for some reason the lack of success our predecessor had with their drilling put a cloud over this opportunity. People did not know that there had been a series of technical mistakes made in the drilling as AAOG would not discuss them because nobody likes to talk about mistakes. Now we understand that there were only accidental mistakes or procedural mistakes we are very confident that by doing the right things we can succeed in this well.

How do you intent to deploy your drilling equipment and start drilling operations with the well in a way that is going to be successful and different from your predecessor?

We believe in the theory that the drilling company and the operator should work hand in hand. This rarely happens. Many times the drilling companies have their own selfish purposes and methods and in many cases they disappoint the aspirations of the operator. So being under the same hat (with Zenth owning their own rig) but with different backgrounds and methodologies and technical expertise we still believe that they can co-operate in a way that is best for Zenith.

WRITE UP PART 1

How did the visit go?

The international delegation came over to assess the financial and technical abilities of the Zenith group. We took them over 1000km to show them the many activities of Zenith in Italy for a complete financial and technical visit. We visited two sites – one producing gas and one producing electricity.
Zenith’s approach to Tilapia is very different to AAOG’s. We are taking a new license for 25 years whereas AAOG PLC took a license for the tall end of the last four years so it is a totally different concept – we are marrying the Congo for this field and for other fields because the (IPU) visit will permit us to apply for different licenses on top of Tilapia. So this was a very important visit. On top of this, the people who visited us will be our counterparties in the daily running of the operation – filing, accounting, cost of oil capex etc. So all these meetings were in preparation for cooperation for 25 years.

Please give a summary of Zenith Energy

Zenith are the only London-based company that is operating in the French speaking countries of the Congo. We are concentrating on brownfield (production) and specifically on the Tilapia license which is a fantastic license that currently only produces 30 bopd. However we have a nearly completed well (number 103) which has been drilled to 80% of the depth and there only remains a few hundred meters to drill before we can go into production. The Republic of Congo is 90% focused on oil and a little bit on gas and it has a strong history in oil so they have the necessary services in the town of Pointe Noire so we can conveniently develop the Tilapia field using our own rig to produce up to 2,000 / 3,000 or even 5,000 barrels of oil per day.

I was listening to this interview yesterday (yes I know I am quite late to it) and I wrote up a precis of it so that I could go back and review it easily. It is remarkable how much information has been shared there and how significant it is to telling us what happens next after today's news. Suffice to say it is all looking incredibly good for Zenith now. I think that it is worth sharing it here.

AAOG peak market cap was £29,447,256 on 4th January 2019. The share price closed at 16.55p and there were 177,929,038 shares in issue.

This is more than double our market cap today on a 4 year license...

I don’t know if anyone noticed but there was the confirmation of the new Tunisian cabinet yesterday where the Tunisian Parliament voted to confirm Prime Minister Hichem Mechichi's 11 new ministers to the cabinet including the new minister of energy and mines Sofiène Ben Tounes. It is notable that he used to work at General Electric, Schlumberger and Total and his full biog can be seen here. www.tinyurl.com/nn2pxv7j

I imagine that part of the reason for the very significant delays in getting the approval for Zenith’s Tunisia licenses is due to the fact that Tunisia has been a total mess recently. There have been politically paralysing disagreements between the Prime Minister and the President and also street protests from mostly young residents dissatisfied with the way that the economy shrunk by 8% last year and debt rose to more than 90% of GDP.

Hopefully the fact that these ministers were approved by Parliament – and Sofiène Ben Tounes was approved by 131 votes for to 52 against with 2 abstentions www.tinyurl.com/hknjoyis means that this decision making crisis might finally be coming to an end and we will hopefully get approval of our assets and all of the $1.5-$2 million in cash that goes with this approval fairly soon.

One Dyas and Helium One

One Dyas – They pulled out of the One Dyas deal on the basis that (as they said in their March 2nd 2020 RNS)
- European gas price for calendar year 2020 reaching unprecedented and historical lows having fallen from above €17.2/MWh in October 2019 to current trading at €10.2/MWh for the 2020 calendar year futures contract;
- The target assets being subject to increases in both forecast opex and capex numbers, during the interim period between 9 October 2019 and now, as well as into the future; and
- Political uncertainty during the fundraising period, including the UK General Election and Brexit and, more generally, uncertain macro-economic conditions which negatively affected equity market sentiment.

However, when bigdouble mentioned that “as prices have already increased and are now at the levels they were in April 2019” and asked “Why did the Board not take a longer term view or were there other issues shareholder were not made aware of” instead of just saying that they made a mistake they actually had the gall to turn around and blame the market and shareholders by saying that “Shareholders, and the market more broadly, would not have been happy with the valuation they would have been paying to conclude the deal”.

You could not make this sh*t up. Once again it is our fault and not theirs! You can see it again in their comments on the value of the Helium One shares. With this they “ask that you and other LTH appreciate that this investment was made by the previous team and was not the responsibility of this Board. “

However, at the same time they also say that: “The stock has performed well since listing, an event enabled by significant support and input from SCIR, and we would expect it to continue to perform well in the run up to the well. Any further dilution is not in SCIR's control.”

There is a real pattern coming out here. Any success that comes they are willing to take all of the credit for but any failure belongs 100% to somebody else – whether that somebody else is the previous board or their own shareholders.

As I said at the beginning this lot are just totally untrustworthy and need to be gotten rid of sooner rather than later. We need to keep the pressure on or they will simply revert to their previous ways and continue milking Scirocco and it's shareholders for every penny that they can.

Directors Stock Options

To be honest, I am not sure about the answer to this one as I have not looked into It in detail. BigDouble, who has clearly looked into this area in more detail than I have has suggested that they have granted themselves more than £1 million worth of shares and options in salary for 2020 when they have claimed to be saving us money.

In their response, the board have denied that the numbers are correct but confirmed that all directors are having their fees paid in nominal cost options (essentially shares). They have also mentioned that the 51 million incentive shares that they have issued the five directors would generate £668k in subscription price if exercised. This deliberately glosses over the point that the options will only be exercised if the value of the options is in excess of the strike price.

They have also said that the 7.5million worth of shares issued to Alistair Ferguson were to pay for outstanding wages. This is totally fair enough if those wages were still owed and I have no problem with it – although if the company has really not paid one of its executives a penny in cash for nearly 18 months it really does raise some flags about management.

It is also worth noting that with if you add up all of the shares and options owned by the board as per the figures in bigdouble’s email then you end up with a total of 132,946,553 shares which is 18.365 of the shares in issue. Having that amount of shares onside would be very useful if you had to win an EGM vote on, for example, what price to accept for Ruvuma. This may be overthinking the matter but when you have a board that appear to routinely lie to shareholders then it pays to be cautious.

Scirocco Corporate Governance

The corporate governance at Scirocco is rotten to the core. The fact that Gneiss Energy are allowed to bill the company such enormous amounts of money with no detail about what the billing is for revealed when when shareholders request it only occurs because Gneiss Energy is owned by Fitzpatrick.

Until 11th November 2019 Jon Fitzpatrick was Chairman of the Solo audit committee so essentially he was in charge of deciding whether it was ethical for him to be employing his own company to provide unspecified services to Scirocco at extremely high rates. Unsurprisingly he found this perfectly acceptable…

However, this is just the tip of the iceberg. According to the 2019 Annual Report he remuneration committee is composed of Alistair Ferguson (Chairman), Fitzpatrick and Nicolson. They have decided that it is ok for Doug Rycroft our COO to be employed not by us but by Fitzpatrick;s company Gneiss Energy. As shareholders we do not even know what salary Rycroft earns as he does not work for us. All we know is that his loyalties are to Gneiss and not to Scirocco.

The same remuneration committee has also decided that it is acceptable for our CEO Tom Reynolds to be paid £52,000 for his part-time role (his words in his linked in profile) at Scirocco. However he has also been allowed to bill us a further £53,000 for the “provision of management services” via his limited company “Quixote Advisers Ltd” (see page 76 of the 2019 annual report). Now call me naïve, but I thought that if you were the CEO of a company then providing management services was what you did as part of your PAYE job not something you billed as an extra through a services company.

This should never have been allowed to happen by the remuneration committee and it is a symptom of how little oversight that there is at Scirocco that it has been allowed to happen. I am no tax lawyer but I am willing to bet that a CEO billing more than half of his salary through a limited company is something that HMRC might be pretty interested in as I cannot think of any reason why he would not take his full salary via PAYE.

Gneiss Energy Accounts 2

The other very interesting thing to note is that when you look at the history of employees in the Gneiss Energy accounts then you see the following:

1st November 2016 – 31st October 2017 – the only two employees were Mr & Mrs Fitzpatrick
1st November 2017 and 31st March 2019 – there were 8 employees including the two directors
1st April 2019 – 31st March 2020 – there were 11 employees including the two directors.

In short, it would appear that Gneiss Energy was largely unsuccessful for it’s first year of trading only being able to employ Mr & Mrs Fitzpatrick. However, as soon as Jon Fitzpatrick managed to get himself appointed as a director of Solo and then get Gneiss Energy providing “management services” to his new employers at £763,000 for the year, then Gneiss’ fortunes changed dramatically.

It went from a business that was solely made up of him and his wife to one having 6 additional employees in 2019 and 9 in 2020.

Like I have said before, once Fitzpatrick got himself appointed to the board of Solo/Scirocco everything started working out very well for him and Gneiss energy, even as the fortunes of Scirocco itself took a massive nose dive and the administrative expenses went up from £1.2 million a year (2017) to £1.9 million (2018) and £2.5 million (2019).

Make of this what you will…