A Sustainable
Tanzanian Natural
Gas Business

Annual Report & Accounts 2020

Orca Energy
Annual Report
& Accounts 2020

Financial Highlights


Revenue
77.9$m -9%
2020 $77.9m
2019 $85.6m
Net cash flow
46.5$m +33%
2020 $46.5m
2019 $34.9m
Adjusted funds flow1
39.1$m -9%
2020 $39.1m
2019 $43.2m
Net income attributable
to shareholders
27.8$m +12%
2020 $27.8m
2019 $24.7m
Cash and short-term
investments
104.2$m -25%
2020 $104.2m
2019 $138.7m
Earnings per share
1.00$ +41%
2020 $1.00
2019 $0.71
Gas sales (average)
57.7MMcfd -9%
2020 57.7MMcfd
2019 63.1MMcfd
Working capital (including cash)
74.2$m -31%
2020 $74.2m
2019 $107.0m
Company gross conventional natural gas reserves (2P)
230Bcf -13%
2020 230 Bcf
2019 265 Bcf
Net present value (2P)
discounted at 10%
241$m -15%
2020 $241m
2019 $283m
Revenue
77.9$m -9%
2020 $77.9m
2019 $85.6m
Net cash flow
46.5$m +33%
2020 $46.5m
2019 $34.9m
Adjusted funds flow1
39.1$m -9%
2020 $39.1m
2019 $43.2m
Net income attributable
to shareholders
27.8$m +12%
2020 $27.8m
2019 $24.7m
Cash and short-term
investments
104.2$m -25%
2020 $104.2m
2019 $138.7m
Earnings per share
1.00$ +41%
2020 $1.00
2019 $0.71
Gas sales (average)
57.7MMcfd -9%
2020 57.7MMcfd
2019 63.1MMcfd
Working capital (including cash)
74.2$m -31%
2020 $74.2m
2019 $107.0m
Company gross conventional natural gas reserves (2P)
230Bcf -13%
2020 230 Bcf
2019 265 Bcf
Net present value (2P)
discounted at 10%
241$m -15%
2020 $241m
2019 $283m

Glossary
$
US dollar
MMcfd
Million standard cubic feet per day
Bcf
Billion standard cubic feet
$m
Million US dollar
2P
Proved plus probable
1
Please refer to Non-GAAP measures section of the MD&A for additional information.

CEO’s Statement

Building a business that provides
for the future

Photo of Jay Lyons Photo of Jay Lyons

To have a successful business, we believe you need to clearly understand your core assets, and from that knowledge, focus your energy on optimizing the value realized for all stakeholders. By incorporating good corporate governance, mechanisms can be installed whereby meaningful stakeholder engagement can happen, resulting in value realization.

Jay Lyons
Interim Chief Executive Officer

At a Glance

Partnering to create
opportunity in Tanzania

Orca Energy Inc. (“Orca”, or the “Company”) operates a license in Tanzania which has a total area of approximately 170km2. The license is located on or in shallow water around Songo Songo Island (“SSI”) which lies 25 km off the coast of mainland Tanzania and 200 km south of Dar es Salaam.

At a Glance

Partnering to create
opportunity in Tanzania

Orca Energy Inc. (“Orca”, or the “Company”) operates a license in Tanzania which has a total area of approximately 170km2. The license is located on or in shallow water around Songo Songo Island (“SSI”) which lies 25 km off the coast of mainland Tanzania and 200 km south of Dar es Salaam.

Tanzania Songo Songo
Tanzania Songo Songo

Our Investment Case

1.
Significant underlying resource potential


An independent evaluation of the Songo Songo field affirms that the license contains 230 billion cubic feet (“Bcf”), Proved plus Probable (2P) conventional natural gas reserves giving the asset a 2P net present valuation (discounted at 10%) of more than $240 million.

2.
Enabling Tanzania to meet its energy demands


Gas production from our facilities continues to play a significant role in Tanzania’s energy infrastructure, with the Company’s output delivering approximately 39% of all the electrical power generated in Tanzania.

3.
Firmly focused on Tanzania


Following a strategic change in direction during the year, the Company is firmly focused on optimizing value at Songo Songo. The license has upside potential which has yet to be unlocked.

4.
Successfully navigated the COVID-19 downturn


The Company took decisive action in Tanzania, safeguarding the welfare of its workforce and ensuring safe and reliable operations could continue. We have continued to adopt a prudent approach to capital discipline, ensuring the Company’s strong liquidity position was protected.

5.
Generating value for stakeholders


Providing a reliable source of natural gas to the Tanzanian energy market to underpin a sustainable return to stakeholders.

6.
Supporting local communities in Tanzania


The Company continues to take its role as being a sustainable and best in class corporate citizen very seriously. As such, we remain in close dialogue with the communities local to Songo Songo and continue to train, develop and retain a high level of local workers and professionals, in addition to further charitable initiatives the business is involved within country.

Company Operations

Photo of pipeline

Company Operations

Maintaining a reliable energy
source for Tanzania during
global supply challenges

It is reasonable to say that 2020, and in particular the first half of the year, was a challenging time for the Company in Tanzania. Extraordinarily heavy and protracted rains, normally seen in March and April, commenced before the year began and lasted until well into the middle of the year.

Producing wells

5 Songo Songo
license

Employees

111

Photo of pipeline
Photo of some workmen in a circle

Our Workforce

Proud to have an in-country
workforce made up of 99%
local Tanzanian staff

We remain firmly focused that our workforce and leadership teams reflect the community and culture where we operate. We are proud of the recent progress that we have made to diversify our workforce, having successfully adapted the Company from a broad expatriate management organization to one that is, largely founded on Tanzanians. Our operational workforce is currently made up of 99% local staff, this reflects a steady increase year on year.

Rehema
Shija
Photo of Rehema Shija Photo of Rehema Shija

Sustainability
& Responsibility

Redefining our focus
and creating long-term
sustainable value

Our main goal is to grow a sustainable business model around our asset in Tanzania.

The Company’s vision of sustainability is founded on the principle of generating enduring long-term value through the prudent governance of business risk and financial resources. The sustainability of the business is being maintained through our responsibility to minimize our environmental impact, maximize our social and economic investments in our local community through our Corporate Social Responsibility (“CSR”) program and support the development of our employees. Orca believes that a combination of strong governance practices, our sustainable business model and a diverse and talented workforce gives us the ability to create value for our shareholders and other stakeholders while contributing to a lower carbon-based future.

Coast of an island