TORTOLA, BRITISH VIRGIN ISLANDS – February 28, 2022 – Orca Energy Group Inc. (“Orca” or the “Company” and includes its subsidiaries and affiliates) (TSX-V: ORC.A, ORC.B) announces the approval of its Independent Reserves Evaluation as at December 31, 2021. All currency amounts in this news release are in United States Dollars ($) unless otherwise stated.
INDEPENDENT RESERVES EVALUATION
The Company’s conventional natural gas reserves as at December 31, 2021 for the period to the end of the primary (25 year) term of the production sharing agreement (the “Songo Songo PSA“) with the Tanzanian Petroleum Development Corporation (the “TPDC“) have been evaluated by independent petroleum engineering consultants McDaniel & Associates Consultants Ltd. (“McDaniel“) in accordance with the definitions, standards and procedures contained in the Canadian Oil and Gas Evaluation Handbook (“COGE Handbook“) and National Instrument 51-101 – Standards of Disclosure for Oil and Gas Activities (“NI 51-101“). The Songo Songo PSA expires upon the expiry of TPDC’s Songo Songo licence in respect of the Songo Songo gas field (the “Songo Songo Licence“) in October 2026. The preparation date of the independent reserves evaluation prepared by McDaniel is February 24, 2022 and the effective date of the evaluation is December 31, 2021 (the “McDaniel Report“).
All the Company’s reserves are located in Tanzania. Reserves included herein are stated on a Company gross reserves basis unless noted otherwise. Company gross reserves are the total of the Company’s working interest share in reserves before deduction of royalties owned by others and without including any royalty interests of the Company, and are based on the Company’s 92.07 percent ownership interest in the reserves following the transaction with Swala Oil & Gas (Tanzania) plc (“Swala“) described in Note 3 to the tables below.
The Company’s Board of Directors has reviewed and approved the McDaniel Report. Additional reserves information required under NI 51-101 is included in Orca’s reports relating to reserves data and other oil and gas information under NI 51-101, which will befiled on its profile on SEDAR at www.sedar.com. The following discussion is subject to a number of cautionary statements, assumptions, contingencies and risks as set forth in this news release.
- Total Proved (“1P”) Gross Company conventional natural gas reserves at year ended December 31, 2021, were 160 billion standard cubic feet (“Bcf”). After adjustment for the Company’s share of gas produced in 2021, this represents an 11 %, or 21 Bcf decrease from the year end 2020.
- Total Proved plus Probable (“2P”) Gross Company conventional natural gas reserves at year ended December 31, 2021, were 188 Bcf. After adjustment for the Company’s share of gas produced in 2021, this represents a 9%, or 22 Bcf decrease from the year end 2020.
- Net Present Value of 1P future net revenue discounted at 10% was $177.8 million at year end 2021, compared to $216.4 million at year end 2020, representing an 18% decrease.
- Net Present Value of 2P future net revenue discounted at 10% was $209.9 million at year end 2021, compared to $241.3 million at year end 2020, representing a 13% decrease.
- The reduction in Gross Company 1P reserves from year end 2020 to year end 2021 are attributed to lower forecasted Company conventional natural gas sales, which will be classified as Additional Gas, as defined in the Songo Songo PSA (“gas sales”) to the end of the current Songo Songo Licence term (October 2026). While actual gas demand is forecasted to increase, the startup of several new gas demand projects shifted during the past year, in part due to COVID-19 pandemic related impacts on investment, construction and supply chains.
- The reduction in net present values of future net revenue was primarily attributed to lower reserves at year end 2021 associated with the reduced number of years remaining on the Songo Songo Licence (4.8 years at YE 2021 versus 5.8 years at YE 2020, or a 17% reduction in producing days to the end of the Songo Songo Licence term).