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Scirocco Energy Plc expands scope to seek opportunities in sustainable energy

“We are presently screening a pipeline of opportunities around which we believe we can grow the business and deliver sustainable shareholder value underpinned by steady cash flow, reliable dividends, and a positive ESG story,” said Alastair Ferguson.

() has expanded the scope of its investment strategy which, in March 2019, set out to participate in opportunities for long-term, sustainable value in European energy market.

The company, somewhat reflecting broader sector themes, said it is now screening opportunities in the energy transition space, “as the world looks to embrace a more sustainable energy future.”

Its identified areas of opportunity include ‘energy’ generation assets (including gas, biogas or power), ‘circular’ assets which recover a valuable component of an industrial, municipal or agricultural waste stream for re-use, and ‘vector’ assets such as low-carbon energy storage, transmission or delivery.

Compelling opportunities around natural gas will still be considered by management due to its prominent role within the energy transition, as a bridging fuel, and, the company is setting new targets based around total shareholder return on deployed equity rather hydrocarbon production targets.

Scirocco highlighted that its goal is to acquire a focused portfolio of cash generative assets within the sustainable energy and circular economy sector.

The company said it believes it will offer shareholders and investors exposure to cash generative investments with an attractive risk/reward ratio, and, the ability to deliver value through dividends and capital growth. 

Scirocco said that, with a five-year timeline, it is targeting an asset base with an enterprise value of £150mln, capable of generating around £20mln of cash flow per year.

Advanced talks are ongoing regarding its first transaction in the sustainable energy space. Specifically, it noted that it is an energy generation asset and presently it is actively progressing the due diligence process.

“Both the energy and capital markets have changed considerably since this board set its original strategy around European Energy almost two years ago,” said Alastair Ferguson, Scirocco chairman.

“The combination of an abundance of compelling opportunities and wider investor appetite in the low-carbon space with an improved risk-reward ratio has resulted in us increasingly focusing our business development in this area. 

“We are presently screening a pipeline of opportunities around which we believe we can grow the business and deliver sustainable shareholder value underpinned by steady cash flow, reliable dividends, and a positive ESG story.”

Ferguson added: “Scirocco is wholly supportive of energy transition and it is our ambition to be a part of that long-term movement.”

Appointment of Muir Miller

The company included in today’s announcement the appointment of Muir Miller as an Independent Non-executive Director with immediate effect.

Miller is an engineer with two decades of senior executive experience, with particular focus on the renewable energy sector.  He was previously managing director of Peel Energy, a part of British infrastructure, transport and real estate investor Peel Group.

Scirocco highlighted that over a ten year period, under Miller’s management, Peel Energy developed and sold £121mln of assets without any long-term equity investment, and cleared over £61mln of cash profits.

Miller will chair a new Sustainability Committee at Scirocco.

In line with the company’s commitment to cost control and maintaining an appropriately sized board, the company has noted that Jon Fitzpatrick – an investment banker with an oil and gas background – will stand down from the board and not seek re-election at the next AGM.

The company added that Fitzpatrick, who is a non-executive director and senior advisor to the board, remains a material and supportive shareholder in the company.

“We welcome Muir to our board and look forward to adding his experience to the pool of renewables experience we possess,” Alastair Ferguson added.

“Muir has a proven track record of strategic direction, business plan execution and successful delivery of low carbon assets, so we will benefit from his considerable experience as we progress our strategy within this area. Muir will head up our newly established Sustainability Committee that will be responsible for developing an effective ESG strategy that supports our growth ambitions.”

Helium One progress report

Scirocco owns a 13.7% interest in AIM-quoted Helium One which is a non-energy, non-carbon gas exploration play.

Helium One is advancing the exploration of the Rukwa project in Tanzania which could, in time, prove to be one of the world’s largest primary, natural sources of helium – which is a critical component in high-tech medical equipment such as MRI.

Read More: Scirocco Energy Plc expands scope to seek opportunities in sustainable energy

2021-02-18 02:44:00

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