Wentworth Resources has struck a deal to buy Scirocco Energy’s 25% stake in the Ruvuma licence, for up to $16 million.
Wentworth will pay an initial sum of $3 million completion of the deal. It will pay another $3mn on a final investment decision (FID), with more payments due on first gas delivery and a gross production target.
The buyer is also providing a loan of $6.25mn to meet cash calls. This will cover from the economic date of the deal, of January 1, 2022, until completion.
The long stop date is June 30, 2023.
Katherine Roe, CEO of Wentworth, said the deal was transformational. The company will become a “dual-asset, full-cycle E&P with a significantly enhanced resource base and production profile. The deal represents an attractively priced, low risk entry into a high growth opportunity which cements our position as a leading supplier of domestic gas to Tanzania.”
The operator plans to drill an appraisal well, the Chikumbi-1, on the asset in late 2022 or early 2023. First gas should come in late 2024, with the aim of reaching 140 million cubic feet per day.
The partners in Ruvuma plan to export gas via a yet-to-be constructed 30 km pipeline to the Madimba facility. This currently takes gas from Mnazi Bay, in which Wentworth has a stake.
io consultancy, in a 2017, put a full field development at $143mn gross.
Tom Reynolds, Scirocco’s CEO, said the board had “no doubt whatsoever that this is wholly in the best interest of the company and its shareholders”.
He described Wentworth as the “perfect counterparty that can add value to the JV going forward, and their existing profile in Tanzania ensures lower deal execution risk and the best chance of a swift completion”.
Scirocco intends to focus on the circular economy in future. The company launched its sales process for the Ruvuma asset in March 2020.