Malcy’s Blog: Flash blog: Scirocco, Coro/Empyrean.

Another flash blog today as I’m in Edinburgh meeting and greeting, attending the annual dinner and also a visit to Murrayfield.

Scirocco Energy

Scirocco has announced that it will today be posting a Circular to Shareholders, along with accompanying Notice of General Meeting and Form of Proxy, associated with the general meeting requisition request pursuant to section 303 of the Companies Act 2006 received by the Company, and as announced on 6 February 2024.

The Circular, and accompanying Notice of General Meeting and Form of Proxy, can be accessed via the following link on the Company’s website: https://www.sciroccoenergy.com/investors/shareholder-information/

The General Meeting will be held at 10am on 19 March 2024 at the offices of Buchanan Communications, 107 Cheapside, London EC2V 6DN

For reasons described in the Circular, Shareholders are strongly encouraged to VOTE AGAINST the Resolution at the GM, as the Board intends to do so in respect of its beneficial holdings.

Shareholders will be interested to see the position to be established by the board as the future of the company is decided in shareholder meetings starting with this one. I think it is interesting that the board are fighting vigorously which effectively means that they feel that they can deliver in the future.

The board must be saying that more value can potentially be delivered by re-tasking the company with its listing. Perhaps more crucially is that the management are not seeking an indefinite period in which to do this process, in which they could run the risk of burning G&A down but are confident that by setting a short period to ‘rigorously look and test’. 

The board firmly believes that going down the liquidation route caps potential return and is not a quick solution as it may last three years, or longer depending on Ruvuma development performance which should be borne in mind. This last point is worth stressing, liquidation is not the only or obvious answer to the company’s plans going forward and shareholders could be well advised to see what the best options are for the future.

Coro Energy

Coro has announced that the gas price and volume allocation for the Mako field project in the Duyung PSC has been approved by the Indonesian Minister of Energy and Natural Resources. This is a significant milestone that allows Conrad, the operator of the Duyung PSC, to finalise fully termed Gas Sales Agreements. The Mako project will contribute to Indonesia’s target of doubling gas production by 2030.

· SKK Migas, the Indonesian upstream regulator, has informed Conrad, the operator of the Duyung PSC, that the Indonesian Minister of Mining and Natural Resources has issued a letter  which approves the volumes and prices for gas exported and sold domestically from the Mako gas field in the Natuna Sea.

· The Allocation Letter is a key step in advancing the documentation for the sales of Mako gas and access to the West Natuna Transportation System (“WNTS”), as it serves as the formal basis for reserving pipeline capacity for the evacuation of Mako gas. As previously announced, work continues to finalise the GSAs (with customary conditions precedent).

Both Coro and Empyrean have announced this but as only the latter has commented I will use their views as to its importance. 

Empyrean Energy

Empyrean has advised that Conrad Asia Energy Ltd, the operator and 76.5% partner of the Mako Gas Field in the Duyung PSC, Indonesia, today announced that the gas price and volume allocation for Mako have been approved by the Indonesian Minister of Energy and Natural Resources. This is a significant milestone that allows Conrad to finalise fully termed Gas Sales Agreements. The Mako project will contribute to Indonesia’s target of doubling gas production by 2030.

Highlights

·      SKK Migas, the Indonesian upstream regulator, has informed Conrad that the Indonesian Minister of Mining and Natural Resources has issued a letter which approves the  volumes and prices for gas exported and sold domestically from the Mako gas field in the Natuna Sea.

·      The Allocation Letter is a key step in advancing the documentation for the sales of  Mako gas and access to the  West Natuna Transport System (“WNTS”), as it serves as the formal basis for reserving pipeline capacity for the evacuation of Mako gas. As previously disclosed, Conrad is continuing to work with the relevant parties and SKK Migas to finalise the GSAs (with customary conditions precedent).

Duyung PSC – Mako Gas Field

Empyrean holds an 8.5% non-operated interest in the Duyung PSC which is located in the Riau Islands Province, Indonesian waters in the West Natuna area, approximately 100 km to the north of Matak Island and about 400 km northeast of Singapore.

In Q3 2023, Conrad signed a non-binding term sheet with Sembcorp, a major Singapore energy company, which outlines the key terms and serves as the basis for negotiating a definitive GSA.

SKK Migas has informed Conrad that the Minister issued the Allocation Letter authorising the volumes and prices of Mako gas for export and domestic sale.

In line with its Domestic Market Obligation (“DMO”) as set out in the POD, Conrad has progressed negotiations of the sales of the domestic portion of Mako gas to a domestic buyer. Subject to the construction of the pipeline connecting the WNTS with Batam, Conrad intend to sell Mako gas to a domestic buyer to satisfy its DMO representing approximately 29.5% of Mako gas sales volumes. Conrad and the domestic buyer are finalising a formal agreement to govern these arrangements.

Empyrean CEO, Tom Kelly, stated:

“This approval from the Minister of Energy and Natural Resources in Indonesia of the gas pricing and allocation is welcomed as an important milestone towards completing  definitive and binding Gas Sales Agreements for Mako gas. It is very pleasing to see support from the Indonesian Government for the Mako Gas Field that will help Indonesia transition to cleaner fuels for energy.”

For Empyrean and of course Coro this is indeed an important milestone for Mako gas as it takes both  companies to the next stage in their plans for disposal of their stakes in the field.