Scirocco investment in EAG performing well

Scirocco Energy said in an update on Thursday that its investment in Energy Acquisitions Group (EAG) was showing positive results.

The AIM-traded firm owns 50% in the EAG joint venture, which wholly owns and operates Greenan Generation, a 0.5MW anaerobic digester plant in Northern Ireland.

In the fourth quarter of 2022, the Greenan plant exceeded the key performance indicators of production, revenue, and EBITDA achieved in the last three months of 2021.

The plant's enhanced operational and financial performance was put down to high operational efficiencies, and strong revenue arising from NI Renewable Obligation Certificates (NIROC) in December.

Scirocco said the operational efficiencies of the plant were 96.35%, 98.09%, and 97.57% in October, November, and December, respectively.

Revenues for the period increased 26% to £0.42m, compared to £0.33m in the fourth quarter of 2021, while EBITDA increased 48.1% to £0.23m, from £0.16m a year earlier.

The board said the plant's steady performance was expected to continue in the first quarter of 2023, with a positive outlook underpinned by consistent power pricing of around £100 and over per megawatt-hour, and the anticipated inflation-linked NIROC revenue increase in March.

Ongoing upgrade works designed to enhance operational and financial performance were continuing to be carried out, funded through excess operational cash flows.

During the period, the management team upgraded all fire and gas detection systems on-site and built a new chicken litter storage facility as it continued to optimise biogas yields from lower-cost feedstocks.

Greenan also benefited from a site upgrade of new JCB ramps, digestate sumps, as well as upgrading the concrete structure around the digesters and CHP container.

“We're delighted to provide this positive trading statement regarding the operational performance of EAG and GGL,” said Scirocco chief executive officer Tom Reynolds.

“GGL site has outperformed expectations across all operational and financial key performance indicators, and demonstrates the effectiveness of EAG management's optimisation techniques.

“This value uplift is a repeatable model that underpins the strategic focus on this asset type and will be applied to future plants added to the portfolio in due course.”

Reynolds said the company was “pleased” with EAG's progress on business development, and was looking forward to adding a second plant to the portfolio in the coming months.

“As recently guided, Scirocco continues to make progress towards divestment of its legacy investment in the Ruvuma development.

“Scirocco is in dialogue with the Tanzania Revenue Authority in order to gain its approval for the deal.

“The firm consideration, as well as the contingent consideration elements associated with the accelerated first gas of that project, will provide funds that can be deployed into the compelling and profitable opportunities within EAG's deal flow pipeline.”

At 1513 BST, shares in Scirocco Energy were up 19.31% at 0.42p.

Reporting by Josh White for Sharecast.com.