Orca Energy Group Inc. Announces Completion of its Q1 2021 Interim Filings

TORTOLA, BRITISH VIRGIN ISLANDS – May 18, 2021: Orca Energy Group Inc. (“Orca” or the “Company” and includes its subsidiaries and affiliates) (TSX-V: ORC.A, ORC.B) today announces that it has filed its condensed consolidated interim financial statements and management’s discussion and analysis for the three month period ended March 31, 2021 (“Q1 2021“) with the Canadian securities regulatory authorities. All amounts are in United States dollars (“$”) unless otherwise stated.

  • Revenue increased 5% for Q1 2021 to $18.6 million compared to the same prior year period. The increase was primarily a result of increased sales to industrial customers. Gas deliveries for the quarter increased by 4% compared to the same prior year period. The increase in gross sales volume was primarily due to the increase in gas deliveries to industrial customers as a result of expansion of the Company’s customer base.
  • Net income attributable to shareholders decreased 69% for Q1 2021 to $4.0 million compared to the same prior year period, primarily a result of the decrease in the reversal of loss allowances related to the lower collection of arrears from Tanzanian Electric Supply Company Limited (“TANESCO”) compared to Q1 2020.
  • Net cash flows used in operating activities for Q1 2021 were $0.8 million compared to net cash flows from operating activities of $0.8 million in Q1 2020, a decrease of $1.6 million. The decrease was primarily a result of the lower collection of TANESCO arrears being offset by an increase in trade and other receivables from Q4 2019 to Q1 2020.
  • Adjusted funds flow from operations for Q1 2021 increased by 13% to $8.6 million compared to the same prior year period, primarily a result of the increase in revenue.
  • Capital expenditures decreased by 53% for Q1 2021 to $0.2 million compared to the same prior year period. The capital expenditures in Q1 2021 were primarily for well workover planning and design.  The capital expenditures in Q1 2020 primarily relate to the flowline decoupling construction. The Company is currently installing compression to allow production volumes to be sustained at approximately 102 million standard cubic feet per day (“MMcfd”) through the Songas infrastructure. This provides the possibility to expand production capabilities to 172 MMcfd by also utilizing the National Natural Gas Infrastructure (“NNGI”). The value of the contract for compression is $38 million of which $24.7 million was incurred prior to 2021 with forecasted expenditures of $9.5 million for 2021, upon delivery and inspection of the equipment, and $3.8 million for 2022 following installation and testing. The project is currently on budget and on schedule for completion in Q2 2022. 
  • The Company exited the period in a strong financial position with $47.4 million in working capital (December 31, 2020: $74.2 million), cash and cash equivalents of $68.0 million (December 31, 2020: $104.2 million) and long-term debt of $54.2 million (December 31, 2020: $54.2 million). The decrease in working capital and cash and cash equivalents was primarily related to the substantial issuer bid completed in January 2021 (“2021 SIB”).
  • As at March 31, 2021 the current receivable from TANESCO was $ nil (December 31, 2020: $ nil). TANESCO’s long-term trade receivable as at March 31, 2021 was $26.8 million with a provision of $26.8 million compared to $27.6 million (provision of $27.6 million) as at December 31, 2020. Subsequent to March 31, 2021 the Company invoiced TANESCO $0.4 million for April 2021 gas deliveries and TANESCO paid the Company $2.6 million for Q2 2021 gas deliveries and $5.0 million for the take or pay invoice for the 2015-2016 contract year. In accordance with the Portfolio Gas Sales Agreement, the take or pay gas for the 2015-2016 contract year was to be taken by June 30, 2021, however the Company has agreed with TANESCO to extend the time period to take the gas until June 30, 2022.
  • On February 23, 2021 the Company declared a dividend of CDN$0.10 per share on each of its Class A common voting shares (“Class A Shares”) and Class B subordinate voting shares (“Class B Shares”) for a total of $1.6 million to the holders of record as of March 31, 2021 which was paid on April 15, 2021.
  • On January 22, 2021 the Company announced the final results of the 2021 SIB whereby the Company repurchased and cancelled 6,153,846 Class B Shares at a price of CDN$6.50 per Class B Share representing an aggregate purchase price of CDN$40.0 million and 25.2% of the total number of the Company’s issued and outstanding Class B Shares and 23.5% of the total number of the Company’s issued and outstanding shares.

Jay Lyons, Interim Chief Executive Officer, commented:

“We are pleased to report a solid set of Q1 results, which include an increase in revenue reflecting our growing customer base and continuing role in helping to meet Tanzania’s growing power needs.  Operationally, we remain on track and within budget with the installation of compression equipment, designed to ensure the Company can maintain production volumes at 102 MMcfd, with the potential to increase by a further 70 MMcfd.  With a tight control on costs, we maintain a strong balance sheet, enabling us to not only continue investing in the creation of value from the world class Songo Songo gas field, but also making appropriate returns to our shareholders.  We look forward to continuing to keep our stakeholders appraised of our progress as we move forward.”

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