Scirocco Energy PLC (AIM:SCIR) has highlighted the positive operational performance of its 50%-owned Energy Acquisitions Group Ltd (EAG) joint venture, which wholly owns and operates Greenan Generation Limited (GGL), a 0.5MW Anaerobic Digestor (AD) plant in Northern Ireland.
In the fourth quarter (Q4) of 2022, the company noted, GGL performed strongly, exceeding the key performance indicators (KPIs) for production, revenue and EBITDA achieved in Q4 2021.
It said GGL continued to operate at the top end of capability, with operational efficiencies of 96.35%, 98.09% and 97.57% in October, November and December respectively. Revenues for the period increased by 26% to £423,000 (Q4 2021: £334,000) and EBITDA increased by 48.1% to £231,000 (Q4 2021:£156,000).
The enhanced operational and financial performance is largely due to high operational efficiencies and strong revenue arising from NI Renewable Obligation Certificates (NIROC) in December 2022, the company added.
It noted that GGL saw a steady performance through Q1 2023 and there is a positive outlook underpinned by consistent power pricing of around £100 and over per MW/hr and the anticipated inflation-linked NIROC revenue increase in March 2023. Ongoing upgrade works designed to enhance operational and financial performance have also benefited the site.
During Q1 2023, EAG signed a long-term lease and commercial agreement with a leading UK fresh produce company and hopes to start construction on its first biofertiliser manufacturing plant in Q2 2023. This marks the start of a rollout of multiple similar projects which are designed to recover the nutrient content of the biogas by-product.
Scirocco pointed out that EAG's management hope to deliver the first biofertiliser product to the market in Q1 2024, having signed a commercial cooperation agreement with a major global player in the nutrients market in 2022. Sales of this biofertiliser product will strengthen and diversify EAG's revenue.
In addition, further to the announcement on 7 December 2022 regarding the signing of an exclusivity agreement to negotiate the purchase of the entire share capital of an industrial AD site in South West England, EAG is completing its due diligence process and hopes to complete this acquisition in April or May 2023.
EAG has received a debt offer to support the acquisition and the equity requirement is expected to be provided by Scirocco following the completion of the Ruvuma sale. The target plant has delivered consistent operational and financial results over the past seven years, generating an EBITDA of £567,000 for its last financial year.
In parallel, EAG continues to develop its acquisition pipeline and is close to entering additional exclusivity positions on at least one further Biogas operation in 2023.
In a statement, Scirocco's CEO Tom Reynolds said: "The GGL site has outperformed expectations across all operational and financial KPIs 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. We're pleased to note EAG's progress on business development and look forward to adding a second plant to the portfolio in the coming months."
He added: "As recently guided, Scirocco continues to make progress towards divestment of its legacy investment in the Ruvuma development. Scirocco is in dialogue with the Tanzanian 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."