Scirocco Energy Shares Soared 51% on Joint Venture Success

Key points:
Scirocco Energy shares soared 51.4% on an update about its JV with EAG.
The sustainable energy company revealed that the JV was quite lucrative.
Investors cheered the news, as evidenced by the rally in SCIR shares.

The Scirocco Energy PLC (LON: SCIR) share price soared 51.4% after issuing an update about its investment in Energy Acquisitions Group Ltd (EAG), completed on 25 August 2021. The company noted that the investment had paid off handsomely.

Scirocco noted that after investing £1.2 million in EAG in August 2021 to acquire a 50% stake in the specialist acquisition and operating vehicle, EAG went on to fully acquire Greenan Generation Limited (GGL), which owns and operates a 0.5MWe Anaerobic Digestion (AD) plant in Northern Ireland.

Also read: Five Best Green Energy Stocks 2022.

EAG’s acquisition of GGL was completed on 1 October 2021, and in the twelve months, since the deal was completed, GGL has performed much better than expected. As a result, the firm generated £602,000 in pretax profits in the 12 months to 30 September 2022.

GGL generated and delivered about 4 million kWh of sustainable energy, enough to power 1,250 UK homes for a year. The pretax profits occurred despite SCirocco energy investing £295,000 in mechanical upgrades and improvements to secure the plant’s long-term performance.

Scirocco Energy also provided £80,000 to GGL to meet its initial running costs and to hire more salespeople to grow the business and identify other investment opportunities. As a result, the company had already recovered its investment, with GGL now generating surplus cash that could be used to fund other investments.

Investing in the anaerobic digestion (AD) plant validated the company’s focus on this type of sustainable energy project. The firm is currently assessing an attractive pipeline of projects it could acquire.

Scirocco’s joint venture with EAG has paid off immensely. The two firms are looking to continue the partnership in future projects as they identify and acquire other sustainable energy projects in the UK and abroad.

Tom Reynolds, Scirocco Energy’s CEO, said: “We’re delighted to provide an update covering the first year of the JV with EAG and its ownership of GGL. As noted, GGL has performed strongly, exceeding projections at the point of acquisition and demonstrating the highly cash-generative, profitable nature of the asset acquired.”

*This is not investment advice.

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