Orca Exploration Group Inc. Announces Authorization of Substantial Issuer Bid, Provides Outcome of Strategic Review Process and Announces Focused Strategy to Grow Integrated Gas Business in Africa.

TORTOLA, British Virgin Islands, Jan. 24, 2020 (GLOBE NEWSWIRE) — Orca Exploration Group Inc. (“Orca” or the “Company” and includes its subsidiaries and affiliates) (TSX-V: ORC.A, ORC.B) announced today the authorization of a substantial issuer bid, the outcome of its strategic review process, and its focused strategy to grow an integrated gas business in Africa.

Outcome of Strategic Review Process

With the assistance of its financial advisor, RBC Capital Markets, the special committee (the “Special Committee”) of the board of directors of the Company (the “Board of Directors”) completed a thorough review of the options available to the Company to maximize shareholder value. As part of the strategic review, the Special Committee considered and evaluated a substantial issuer bid, a secondary listing of the Company’s shares on another exchange, a reorganization of the Company’s share capital, a secondary offering of the Company’s outstanding shares, and the acquisition of the Company or other arrangement, merger transaction or business combination with another company resulting in asset and/or jurisdiction diversification and a larger, more liquid market, for the equity of the combined company.

Based on the alternatives available to the Company, the Special Committee has recommended, and the Board of Directors has concluded, that it is in the best interests of the Company and its shareholders to continue operating as an independent company with a view to enhancing value to its shareholders through a balanced approach, focused on:

  1. Return of Capital: The return of retained cash to shareholders in the form of share repurchases and/or dividends.
  2. Value Maximization of the Songo Songo Production Licence: The continued value maximization and monetization of the Company’s rights to develop the Songo Songo natural gas field in Tanzania; and
  3. Sustainable Growth: Strategic reinvestment utilizing the Company’s core competency to develop a sustainable, integrated gas business in Africa with accretive returns.

In conjunction with the announcement of this strategy, the Company intends to return a portion of its excess cash to shareholders through a substantial issuer bid. See “Return of Capital and Announcement of Substantial Issuer Bid” below. The Company also plans to introduce a dividend policy in the first half of 2020 providing for regular dividends determined on an annual basis, and will assess from time-to-time incremental returns of capital to shareholders relative to the merits of available investment opportunities.

Nigel Friend, Chief Executive Officer, commented:
“We are pleased to have concluded the strategic review process. On the back of our strong performance in 2019, it is now the right time to return a portion of our retained cash back to shareholders through a substantial issuer bid. The prudent management of capital and regular distributions to our shareholders will continue to be a core part of our strategy.

We believe that the decision to focus on generating material returns for shareholders via organic growth and strategic reinvestment of retained capital into other African gas opportunities, will enable the Board of Directors and management to deliver accretive value to shareholders going forward.

Given the strength of Orca’s operations and the Company’s balance sheet, we are well placed to deliver on the agreed mandate outlined by the strategic review process.”

Return of Capital and Announcement of Substantial Issuer Bid

During 2019, Orca completed a normal course issuer bid (“NCIB”) for the purchase of its Class B Subordinated Voting Shares (the “Class B Shares”). Under the NCIB, the Company purchased 933,028 Class B Shares at a weighted average price of CDN$6.43 for an aggregate consideration of CDN$6 million.

The Company also paid a special dividend of CDN$0.60 per share in February 2018 and three quarterly dividends in 2019 totaling CDN$0.17 per share. In addition, a dividend of CDN$0.06 per share has been declared and is payable on 31 January 2020. Upon payment of this 31 January 2020 dividend, the Company will have returned approximately CDN$29 million in dividends to shareholders in the last two years.

The Company announced today that the Board of Directors has authorized management to finalize the terms and conditions for a substantial issuer bid of up to CDN$50 million pursuant to which the Company will offer to purchase a portion of its Class B Shares (the “Offer”). The Company anticipates that the Offer will commence during the next two weeks and will be completed before the end of the first quarter of 2020. The Company intends to fund the Offer from current cash resources.

Under the Offer, which remains subject to the recommendation of the Special Committee and Board of Directors approval, shareholders will have the opportunity to tender their shares through a modified Dutch auction tender. The Offer will not be conditional upon any minimum number of shares being tendered and will be subject to conditions customary for transactions of this nature.

Assuming the Offer is fully subscribed and completed, the Company will have distributed approximately CDN$85 million in dividends and share buybacks since February 2018.

This news release is for informational purposes only and does not constitute an offer to buy or the solicitation of an offer to sell the Company’s shares. The Offer referred to in this news release has not yet commenced. The solicitation and the offer to buy the shares will only be made pursuant to a separate issuer bid circular which will contain full details of the Offer, be filed with the Canadian securities regulatory authorities and mailed to the Company’s registered shareholders.

Maximizing the Value of the Songo Songo Production Licence

2019 was a successful year for the Company’s operation in Tanzania. The highlights include:

  • An increase in 2019 sales volumes to 63.1 million standard cubic feet per day (“MMscfd”) (2018: 39.9 MMscfd). In Q4 2019, sales volumes averaged 70.8 MMscfd (Q4 2018: 44.8 MMscfd). The weighted average sales price for 2019 gas deliveries was US$4.38 per thousand cubic feet (“mcf”) (2018: US$5.17/mcf). In Q4 2019, the weighted average sales price was US$4.24/mcf (Q4 2018: US$4.31/mcf).
  • The signing of a gas sales agreement with Tanzania Petroleum Development Corporation for up to 20 MMscfd (and subsequently increased to 30 MMscfd, with the increased volumes being supplied on a reasonable endeavours basis) to be processed and transported to Dar es Salaam through the National Natural Gas Infrastructure (“NNGI”). The NNGI processing plant on Songo Songo Island has a gas processing capacity of 140 MMscfd.
  • The installation, testing and commissioning of a refrigeration unit on the Songas gas processing facility that is operated by the Company. The addition of the refrigeration unit has increased the volumes that can be transported from the field to Dar es Salaam through the Songas facilities (which are operated by Orca on behalf of Songas) to 97 MMscfd.
  • Capital expenditures for 2019 were US$4.2 million (2018: US$5.8 million). For 2020, capital expenditures are forecasted at US$50.3 million which includes the design and installation costs of a compression unit for the Songas gas processing facility, debottlenecking the flow-line infrastructure, and estimated costs to workover certain wells and other expenditures on the Company’s downstream network.
  • The receipt of US$61.6 million during 2019 from the electricity utility, the Tanzanian Electricity Supply Company, against 2019 invoices for deliveries of US$50.6 million. These excess payments reduced the long-term receivable from TANESCO for prior years’ unpaid gas deliveries to US$47.5 million at December 31, 2019 (December 31, 2018: US$58.5 million). The current TANESCO receivable at December 31, 2019 was nil (December 31, 2018: nil).
  • Cash and short-term investments totaled US$138.7 million at December 31, 2019 (December 31, 2018: US$131.5 million).

The financial highlights described above relating to sales volumes, sales prices, capital expenditures, revenues, cash receipts, receivables, and cash and short-term investments are management estimates only, are unaudited and have not been reviewed by our auditors.

It is anticipated that there will continue to be strong demand for the Songo Songo field’s natural gas through to the end of the Production Sharing Agreement (“PSA”) on 11 October 2026. Demand growth will be driven primarily by the installation of new gas fired power generation capacity and increased consumption from the existing industrial base. While the timing is not yet confirmed, the additional generation at Kinyerzi near Dar es Salaam is expected to commence in the third quarter of 2020, building up to 185MW combined cycl generation capacity in the fourth quarter of 2020.

To sustain current levels of production beyond 2020, it will be necessary to install compression facilities to optimize throughput capacity of the Songas facilities over the remaining term of the PSA and underlying licence. Failure to incorporate compression would lead to a significant loss in production through the Songas facilities as field pressure declines below the level required to deliver gas to the power sector in Dar es Salaam and our industrial customers over time. On 23 December 2019, a Letter of Instruction was signed with an international contractor with significant presence and experience in Tanzania for the commencement of detailed engineering and design for the compression project. A definitive agreement for the project is expected to be signed by the end of February 2020 on a fixed price, turnkey basis. It is forecast that compression will be operational by the end of 2021 and cost approximately US$38 million of which US$34.2 million is forecasted to be spent in 2020.

Orca is evaluating the merits of conducting three workovers on the onshore wells, namely SS-3, SS-4 and SS-10. SS-3 and SS-4 are owned by Songas and are currently shut-in. A decision on the timing and scope of the workovers is subject to the approval of the Board of Directors and agreement with Songas and will likely to be taken by the end of Q2 2020. A cost of US$13.1 million has been included in the 2020 budget for the three workovers. A portion of this cost is expected to be recovered from third parties. In the meantime, the Board of Directors has approved debottlenecking the flow-line infrastructure to increase production potential from the SS-10 and SS-11 wells (both of which are owned by the Company) at an estimated cost of US$1.3 million to be incurred in 2020.

It is estimated that Orca will need to invest approximately US$80.2 million in debottlenecking, compression and workovers to sustain and meet the anticipated gas demand profile over the remaining term of the PSA. The Board of Directors has approved US$39.3 million of this forecasted capital expenditure amount (US$35.5 million for 2020 and US$3.8 million for 2021). Orca intends to recover investments of sustaining capital from net revenues under the cost recovery mechanism in the PSA.

The Government of Tanzania is currently reviewing for potential renegotiation the terms of all existing licences and related production sharing agreements for the exploration, development and production of oil and gas in Tanzania. While the details or outcome of this review are not yet known, the Government of Tanzania has previously indicated it will present the relevant parties with its conclusions and plans during the first half of 2020. This may result in the Government seeking to re-negotiate the terms of our existing PSA.

As at 30 June 2019, the Company had best estimate (unrisked) contingent resources of 683 Bcf remaining (risked:341 Bcf) within the Songo Songo licence acreage that may be accessed through the drilling of new gas wells and the construction of flowlines to the gas processing infrastructure on Songo Songo Island, or processed and transported through the NNGI, assuming the term of the Songo Songo licence and PSA are extended. See Orca’s news release dated November 6, 2019 entitled “Orca Announces Independent Natural Gas
Resource Report”
for more details. While Orca is keen to extend the PSA beyond 2026 with a view to continuing to support Tanzania’s economic and industrial development, Orca will only agree to changes to the PSA and commitments to further investment in the field where the Songo Songo licence and PSA are extended on acceptable terms and there is a clear path to monetizing the gas with returns that are superior to other investment opportunities available to the Company.

Focused Strategy to Grow the Company’s Integrated Gas Business in Africa

Orca’s success has been built on the development and operation of its Songo Songo gas field in Tanzania, its midstream infrastructure and a downstream distribution network that transports and distributes low pressure gas to industrial consumers. This project remains one of the few integrated gas projects in sub- Saharan Africa.

One of Orca’s objectives moving forward is to replicate the success of this project elsewhere in Africa and become one of the leading African developers and operators of natural gas resources for domestic consumption. It is envisaged that a focused strategy targeting the consolidation of African gas assets will generate improved liquidity in Orca’s equity.

There have been some significant gas discoveries across Africa in the last 10 years, primarily in Mozambique, Tanzania, Ghana, Senegal and Mauritania. Given the size of these discoveries, it is likely they will be commercialized primarily through Liquid Natural Gas (“LNG”) projects that will see the export of gas to world markets. Orca intends to focus on proven gas resources that do not meet the LNG threshold, and, therefore commercialization will be focused on selling the gas into local domestic markets.

Africa has extensive untapped resources and latent energy demand. Its population is expected to increase by over 60% to 2.1 billion by 2040; one-in-two people added to the global population between today and 2040 is projected to be African.1 The continent’s urban population is set to grow by more than half a billion over that period which is expected to fuel significant economic growth and energy demand.2

It is estimated that 595 million people in Africa do not have access to electricity. Furthermore, most energy in sub-Saharan Africa (excluding South Africa) is used for cooking, which accounts for 70% of total final consumption.3 Solid biomass is the major source of energy used to meet cooking energy needs, the burning of which has material adverse environmental and social impacts. With plentiful solar, hydro and natural gas potential, Africa has a unique opportunity to develop and diversify its energy supply in an efficient and environmentally sound manner.

Natural gas is considered a transitional fuel that will facilitate and support the development of renewable energy sources. It is the only thermal fuel that is expected to increase its market share of energy demand over the period to 2040.4 While there has been a significant decrease in the availability of finance for oil and coal projects, it is expected that projects focussed on increasing the consumption of natural gas in Africa will be well supported given it generates lower carbon emissions compared to other thermal fuels and there are significant social benefits from delivering economic growth and prosperity to the continent through the development of indigenous natural gas resources.

During 2019, the Company built-out its business development team and capabilities and evaluated several investment opportunities, including potential business combinations. Orca intends to focus on acquiring and developing proven gas resources, or merging with entities that have existing gas production, in countries where there is robust market demand for natural gas. It is anticipated that developments would be project-financed once the gas reservoirs are proven to a level that supports the signing of a long-term gas sales agreements with credit-worthy customers. Orca would undertake detailed evaluation of all investment opportunities to ensure that capital is allocated to the most accretive projects. This includes further returns to shareholders where it is considered that the Company trades at a significant discount to its net asset value. Disciplined capital allocation, diversification and increased liquidity are central to Orca’s growth strategy.

Response to Swala Oil & Gas

As a part of the strategic review process and in consultation with its legal and financial advisors, the Special Committee carefully reviewed and considered the non-binding proposal (“Proposal”) from Swala Oil & Gas (Tanzania) plc (“Swala”). As a part of the review, Orca’s financial advisor engaged with Swala’s management, financial advisor, and financing sources to understand the details and plan outlined in the Proposal. Following that review, the Special Committee determined, and the Board of Directors agreed, that the Proposal did not constitute a basis for engaging in further dialogue with Swala. The primary reasons for this decision include:

  1. The Proposal is highly conditional, subject to financing uncertainty and remaining due diligence and significant uncertainty in the timing and ability to successfully announce and close the transaction; and
  2. The Proposal undervalues Orca and its future prospects and the majority of the consideration offered under the proposal is funded through Orca’s cash on hand.

Swala, through its indirect minority equity ownership in Orca’s affiliate, has detailed non-public information relating to Orca’s Tanzanian assets and, together with Orca’s publicly disclosed information, has sufficient information to make a fully-funded proposal which does not rely upon further fundamental due diligence. Additionally, the Proposal does not adequately address the tax and regulatory requirements of Tanzanian authorities that may have to be complied with in order for the transaction set out in the Proposal to be completed.

Under the Proposal, Swala sought to finance the purchase of Orca Shares by utilizing Orca’s cash resources at the time of approximately US$145.7 million and entering into US$75 million of new term loans secured against Orca’s future cash flows. It also should be noted that the Proposal does not include any cash equity financing from Swala, but instead relies on Orca’s cash, debt financing and Swala equity which has a relatively illiquid trading market. Swala is listed on the Dar es Salaam Stock Exchange with a market capitalization of approximately US$22.5 million. Swala’s most recent audited financial statements were filed on 19 December 2019 for the year ended 31 December 2018. In the Basis for Adverse Opinion section, KPMG (Swala’s auditor) states “in our opinion the Group and Company [Swala Oil and Gas (Tanzania) Public Limited Company] cannot be considered to be a going concern and thus the preparation of its consolidated and separate financial statements on a going concern basis is inappropriate”.

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Orca Exploration Group Inc.
Orca is an international public company engaged in natural gas development and supply in Tanzania through its subsidiary PanAfrican Energy Tanzania Limited. Orca trades on the TSX Venture Exchange under the trading symbols ORC.A and ORC.B.

For further information please contact:
Nigel Friend, CEO
nfriend@orcaenergygroup.com
Blaine Karst, CFO
bkarst@orcaenergygroup.com

1 Source: International Energy Agency, Africa Energy Outlook 2019
2 Source: International Energy Agency, Africa Energy Outlook 2019

Orca Exploration Announces Appointment of RBC Capital Markets as financial advisor and Board changes

TORTOLA, British Virgin Islands, Sept. 05, 2019 (GLOBE NEWSWIRE) — Orca Exploration Group Inc. (“Orca” or the “Company”) (TSX-V: ORC.A, ORC.B), operator of the Songo Songo gas field in Tanzania, today announces the appointment of RBC Capital Markets (“RBC”) to review strategic alternatives for the Company under the direction of a special committee of independent directors (the “Special Committee”).

As detailed in the Company’s July 25, 2019 press release, the board of directors (the “Board”) is continuing to focus on maximizing the value of the Company’s Tanzanian business. Orca is currently evaluating several options to increase production to meet forecast gas demand both under the terms of the existing license and any possible license extension. This includes the preparation of a development plan for compression and the drilling of wells in Songo Songo North and their connection to the National Natural Gas Infrastructure. Details including the associated capital cost of this plan will be disclosed as appropriate.

The Board has mandated the Special Committee, with the assistance and advice of RBC, to review strategic alternatives available to the Company to maximize shareholder value. The review is wide ranging and will include the evaluation of alternatives for the return of capital to shareholders and business combination opportunities. The previously disclosed proposal from Swala Oil and Gas (Tanzania) Plc is being reviewed as part of this process.

Orca does not intend to disclose developments with respect to the strategic review process unless the Board has approved a specific transaction, or otherwise determines that disclosure is necessary or appropriate.

Board changes

In support of the Company’s current business plan to maximize the value of the Tanzanian operations and develop its asset base, Orca announces that David Ross has been appointed to the role of Chairman of the Board. David currently holds the position of Non-Executive Director (“NED”) at Orca. In addition, three new NEDs have, subject to TSX Venture Exchange approval, been appointed to the Board effective September 3, 2019. The new NEDs, Frannie Leautier, Ebbie Haan and Carole Wainaina, join the Company as two of Orca’s existing Non-Executive Directors, William Smith and Glenn Gradeen, step down from the Board effective September 3, 2019.

Dr Frannie Leautier

Frannie has extensive African development and project finance experience. She is the Chief Operating Officer for the Trade and Development Bank, a NED of African Risk Capacity (ARC Ltd) and Treasurer and Chair for the Risk and Audit Committee for the African Economic Research Consortium. She amassed significant experience delivering on infrastructure projects at the World Bank before being appointed Vice President and Head of the World Bank Institute in 2001. More recently she was Senior Vice President at the African Development Bank with a focus on improving operational effectiveness and developmental impact. She is Tanzanian, has a PhD in Infrastructure and a Masters degree in Transportation from the Massachusetts Institute of Technology and is proficient in four languages.

Ebbie Haan

Ebbie has 36 years of industry experience in global oil and gas and energy markets. He has a track record of successfully growing and running international upstream ventures, with a particular emphasis on Africa.

Ebbie was the Chief Growth Officer at Maersk Oil where he led their acquisition of a partial interest in Africa Oil’s Kenyan and Ethiopian assets. Prior to this, he was the Managing Director of Sasol Petroleum International, based in Johannesburg overseeing the Sasol Group global upstream business including their five equity interests in Africa. Ebbie started his career at Royal Dutch Shell where he worked for 26 years in both technical and executive roles, with assignments in the Middle East, Europe, USA, Asia and Africa.

Ebbie is currently a NED of The Weir Group PLC. and is also a part-time lecturer for the Energy Leadership course at Wits Business School in Johannesburg, South Africa. He is Dutch and has a MSc in Geology from Utrecht State University in the Netherlands.

Carole Wainaina

Carole is a well-respected senior executive with global experience in strategy formulation and driving organizational change. She currently holds the position of Chief Operating Officer for Africa50 Infrastructure Fund in Morocco. Prior to this, she served as the Assistant Secretary General for Human Resources of the United Nations, leading transformational initiatives for the Secretary General and member states. She has held senior positions for multinational corporations in Turkey, the United States, the United Kingdom and the Netherlands. She served for three years on the Executive Committee of Royal Philips as Executive Vice President and Chief HR Officer and thirteen years at the Coca Cola Company in several positions including as Chief of Staff of the Chairman and Group HR Director Eurasia and Africa.

Carole is Kenyan and has a Bachelor of Business Administration from the University of Southern Queensland, Australia.

David Ross, newly appointed Chairman of Orca commented:

“We are delighted to welcome Frannie, Ebbie and Carole to the Board of Orca. They bring a wealth of experience, across multiple disciplines, at what is an exciting time for the Company. With these new appointments, Orca is well placed to deliver long term value for our shareholders through careful capital management, the development of our operations in Tanzania and possible strategic transactions. Ebbie will join Jay Lyons and Linda Beal on the special committee that has been established to conduct the strategic review with the assistance and advice of RBC.

Finally, I would like to thank William Smith and Glenn Gradeen for their significant contribution to the Company over the years and for their invaluable guidance on corporate and operational issues”.

Orca Exploration Group Inc.

Orca is an international public company engaged in natural gas exploration, development and supply in Tanzania through its subsidiary PanAfrican Energy Tanzania Limited. Orca trades on the TSX Venture Exchange under the trading symbols ORC.A and ORC.B.

For further information please contact:

Nigel Friend, CEO
nfriend@orcaenergygroup.com

Blaine Karst, CFO
bkarst@orcaenergygroup.com

For media enquiries:
Celicourt (PR)
Mark Antelme
Jimmy Lea
Jemima Lowe
Orca@celicourt.uk
+44-207-5209261

Neither the TSX Venture Exchange nor its Regulation Service Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Forward Looking Information

Certain information regarding Orca set forth in this press release contains forward-looking statements that involve substantial known and unknown risks and uncertainties. The use of any of the words “plan”, “expect”, “prospective”, “project”, “intend”, “believe”, “should”, “anticipate”, “estimate” or other similar words, or statements that certain events or conditions “may” or “will” occur are intended to identify forward-looking statements. Although the Company’s management believes that the expectations reflected in the forward-looking statements are reasonable, it cannot guarantee future results, levels of activity, performance or achievement since such expectations are inherently subject to significant business, economic, competitive, political and social uncertainties and contingencies. Many factors could cause Orca’s actual results to differ materially from those expressed or implied in any forward-looking statements made by, or on behalf of, Orca

In particular, forward-looking statements contained in this press release include, but are not limited to, statements with respect to Orca’s expectations regarding preparation of a development plan for compression and the drilling of wells in Songo Songo North and their connection to the National Natural Gas Infrastructure and future disclosures regarding the same; the scope of the Special Committees review; and the composition of the Special Committee.

These forward-looking statements are subject to numerous risks and uncertainties, including but not limited to, the impact of general economic conditions; industry conditions including changes in laws and regulations, and changes in how they are interpreted and enforced; competition; lack of availability of qualified personnel; risks related to obtaining required approvals of regulatory authorities; risks associated with negotiating with governments and other counterparties; fluctuations in foreign exchange or interest rates; changes in income tax laws or tax rates; ability to access sufficient capital from internal and external sources; failure of counterparties to perform under the terms of their contracts, and other factors, many of which are beyond the control of the Company. Readers are cautioned that the foregoing list of factors is not exhaustive.

Although the forward-looking statements contained in this press release are based upon assumptions which management believes to be reasonable, Orca cannot assure investors that actual results will be consistent with these forward-looking statements. Readers are cautioned not to place undue reliance on forward-looking statements included in this press release, as there can be no assurance that the plans, intentions or expectations upon which the forward-looking statements are based will occur. By their nature, forward-looking statements involve numerous assumptions, known and unknown risks and uncertainties that contribute to the possibility that the predictions, forecasts, projections and other forward-looking statements will not occur. With respect to forward-looking statements contained in this press release, Orca has made assumptions regarding, among other things: availability of skilled labour; timing and amount of capital expenditures; future exchange rates; the impact of increasing competition; conditions in general economic and financial markets; effects of regulation by governmental agencies; receipt of partner, regulatory and community approvals; future operating costs; effects of regulation by governmental agencies; that Orca will have sufficient cash flow or equity sources or other financial resources required to fund its capital and operating expenditures and requirements as needed; that Orca’s conduct and results of operations will be consistent with its expectations; current or, where applicable, proposed industry conditions, laws and regulations will continue in effect or as anticipated as described herein; and other matters.

Management has included the above summary of assumptions and risks related to forward-looking information provided in this press release in order to provide investors with a more complete perspective on Orca’s current and future operations and such information may not be appropriate for other purposes. Orca’s actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do, what benefits Orca will derive. These forward-looking statements are made as of the date of this press release and Orca disclaims any intent or obligation to update publicly any forward-looking statements, whether as a result of new information, future events or results or otherwise, other than as required by applicable securities laws. The forward-looking statements contained in this press release are expressly qualified by this cautionary statement.

Orca Exploration Announces Completion of Q1 2015 Interim Filings

TSX-V: ORC.A, ORC.B TORTOLA, British Virgin Islands 29 May 2015: Orca Exploration Group Inc. (“Orca”) announces that it has filed its condensed consolidated interim financial statements and management’s discussion and analysis for the three-month period ended 31 March 2015, together with the comparative three-month period ended 31 March 2014 as restated, with the Canadian securities regulatory authorities.

Orca Exploration Group Inc.
Orca is an international public company engaged in natural gas exploration, development and supply in Tanzania through the wholly-owned subsidiary PanAfrican Energy Tanzania Limited, as well as oil and gas appraisal in Italy. Orca trades on the TSX Venture Exchange under the trading symbols ORC.A and ORC.B.

For further information please contact

W. David Lyons,
Chairman and CEO
+44-7717-100-200
wdlyons@orcaenergygroup.com
Robert S. Wynne
Chief Financial Officer and Director
+1 (403) 399-8046
rswynne@orcaenergygroup.com

Neither the TSX Venture Exchange nor its Regulation Service Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Orca Exploration Announces Completion of Annual Filings

TSX-V: ORC.A, ORC.B TORTOLA, British Virgin Islands 6 May 2015: Orca Exploration Group Inc. (“Orca”) announces that it has filed its consolidated financial statements and management’s discussion and analysis for the year ended 31 December 2014 and its reports relating to reserves data and other oil and gas information under National Instrument 51- 101 – Standards of Disclosure for Oil and Gas Activities with the Canadian securities regulatory authorities.

Orca Exploration Group Inc.
Orca is an international public company engaged in natural gas exploration, development and supply in Tanzania through the wholly-owned subsidiary PanAfrican Energy Tanzania Limited, as well as oil and gas appraisal in Italy. Orca trades on the TSX Venture Exchange under the trading symbols ORC.A and ORC.B.

For further information please contact

W. David Lyons,
Chairman and CEO
+44-7717-100-200
wdlyons@orcaenergygroup.com
Robert S. Wynne
Chief Financial Officer and Director
+1 (403) 399-8046
rswynne@orcaenergygroup.com

Neither the TSX Venture Exchange nor its Regulation Service Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

PRESS RELEASE: World Bank Supports Power Sector Reforms and Expansion of Natural Gas Use in Tanzania

26 March 2013 (Source: Worldbank.org)

First in a series of policy support operations to reform power and gas sectors

WASHINGTON, March 26, 2013 – The World Bank Board of Executive Directors today approved two International Development Association (IDA) credits amounting to US$121.46 million to Tanzania for power sector reforms, forging public-private partnerships, and strengthening national capacity for the optimal use of the country’s natural gas reserves.

“We are committed to reducing the cost of power supply by expanding the use of domestic natural gas in electricity generation and promoting private sector participation in both the power and gas sectors” said Hon. Professor Sospeter Muhongo, Minister of Energy and Minerals, Tanzania “We are taking concrete steps to strengthen power sector governance and to improve planning and implementation capacities for bringing more electricity to homes and businesses across Tanzania.

The Tanzanian power sector is facing major challenges due to below average rainfall that have reduced hydropower generation and due to inadequate past investment in power generation capacity. As a result, the state-owned electricity utility, TANESCO, has increased the use of expensive emergency generation plants that have placed the sector in financial difficulties. The energy sector’s financial woes are expected to peak in 2014, bringing the cumulative deficit over the period 2011-2014 anywhere between US$760 million to US$1 billion.  Less than 19 percent of Tanzania’s 46 million citizens have access to electricity.

“With these two new operations, the World Bank will help to place the power sector on a more sustainable path, and will help create foundations to maximize benefits of natural gas reserves for all Tanzanians” said Philippe Dongier, World Bank Country Director for Tanzania.

The two projects consist in:

  • A Development Policy operation of US$100 million (the first of series of three) that will support the Government of Tanzania to: a) address the financial gap in the power sector, especially in TANESCO, b) help expand power generation using natural gas, including through public-private partnership, c) reform sector institutions, and d) strengthen policy and institutional foundations for maximizing the benefits of natural gas reserves.
  • A complementary technical assistance project of US$21.46 million that will help build critical capacity for the power and gas sectors.  This project is expected to be co-financed by the Canadian International Development Agency (CIDA).

The projects involve collaboration across the World Bank Group, with Jacques Morisset, Lead Economist based in Dar es Salaam serving as team leader for the Development Policy operation, and Robert Schlotterer, Senior Infrastructure Finance Specialist and Alexander Huurdeman, Senior Gas Specialist, serving as co-team leaders for the capacity building project.

PRESS RELEASE NO: 2013/294/AFR

Gas firm says won’t pay money demanded by Tanzania

12 June 2012 (Source: GMT / Reuters Africa)

Dar es Salaam (Reuters) – The largest gas producer in Tanzania – PanAfrican Energy, a unit of Toronto-listed Orca Exploration – said it refuses to pay $33 million that the government says is a legal obligation, in a dispute that could disrupt the country’s gas supplies.

For months, the accusation that PanAfrican has withheld money has put the company on unsteady ground in Tanzania, which is expected to become a significant source of natural gas after news of several big discoveries off its coast this year.

PanAfrican provides the natural gas to fuel generation of about half of the electricity in east Africa’s second-largest economy, which suffers from shortages of hydropower when its weather is dry.

A parliamentary investigation said last year that PanAfrican had denied state-run Tanzania Petroleum Development Corporation (TPDC) a share of gas revenues, a claim that Orca strongly rejects.
“Clearly the government is under pressure to increase its earnings, but we feel the approach taken to resolve this matter has been harsh,” Andrew Brown, PanAfrican’s general manager, told Reuters.
“We are not offering anything that would constitute an offer to compensate for any wrongdoing, as we haven’t done anything wrong.”

PanAfrican said that under the terms of its contract with the government, it is entitled to the money as it recovers the $160 million it has spent in Tanzania so far.

State officials say the funds should not be counted toward cost recovery and belong to the Treasury. The government demanded that the issue be one of many considered when the gas supplier’s contract goes under a routine review this year.

The TPDC says the company spent too much money on downstream network costs, such as the gas facility used to power an electricity plant, and should therefore reimburse the Treasury, because the expenses did not meet the terms of the PSA.

PanAfrican said the spending wasn’t excessive and was in line with international standards.

To settle the matter, PanAfrican agreed to change the terms of its 10-year-old production sharing agreement to give the state a bigger cut of future profits, among other things.

“The audit hasn’t delayed our investments, but clearly the rhetoric flying around has had a severe impact on the business,” Brown said.

The TPDC declined to comment on the issue. “We are still having meetings. I don’t know if there’s a way of discussing it because it’s still ongoing,” said Gabriel Bujulu, principal petroleum engineer at the TPDC, told Reuters.”I don’t think it’s wise to talk about it at this time.”

Orca said in its most recent financial report that PanAfrican collected $18.8 million in revenue from natural gas in Tanzania in the first quarter from the offshore Songo Songo field; made $2 million in profit; and paid $1.8 million to the Tanzanian government under its production-sharing agreement.

© Thomson Reuters 2012 All rights reserved

New gas exploration to boost Tanzania power

(East Africa Business Week)

DAR ES SALAAM, Tanzania — ORCA Exploration Group, the main supplier of natural gas, has significantly increased supply of natural gas to from Songo Songo island in southern Tanzania’s Indian Ocean to Dar es Salaam power generation, from 37 million cubic feet per day (MMcfd) to 57 (MMcfd).

Orca Shifts Focus to Exploration Activities

Oil Voice

Orca Exploration now has a greater focus on exploration to balance its cash flow generative asset in Tanzania. This will commence with the drilling of the La Tosca well in the Po Valley Basin in Q4 2011 where the Company has signed a contract with a subsidiary of Northern Petroleum Plc to farm in on between 70% and 75% of its Longastrino exploration block.

East Africa basks in big gas strikes

17 February 2011 (Source: UPI)

DAR ES SALAAM, Tanzania, Feb. 17 (UPI) — A string of natural gas strikes along Africa’s east coast, with reserves currently estimated at 21 billion cubic feet, is transforming the region into a world-class energy producer after years of being in the shadow of the oil boom in West Africa.

Most of the gas discoveries are off Mozambique and Tanzania but exploration is also under way in Kenya, Ethiopia and the breakaway Somali state of Puntland.

The Indian Ocean island of Madagascar is believed to hold “enormous reserves” of gas, industry sources say.

Seismic data suggest that there are massive offshore oil and gas deposits along East Africa’s coastline, centered largely on a fault line running from war-ravaged Somalia south to Madagascar, making it one of the last great frontiers in the hunt for hydrocarbons.

Major energy companies such as Italy’s ENI, Malaysia’s state-owned Petronas and the giant China National Offshore Oil Corp. have all moved into the region in the last few years.

Plans are afoot to construct a liquefied natural gas export terminal, the region’s first, to supply ever-rising energy demand in Asia by tanker across the Indian Ocean.

The gas reserves are expected to feed a proposed regional pipeline network to meet energy demands in the five-nation East African Community, which are forecast to increase considerably.

“East African offshore oil and gas exploration, long eclipsed by … by activities in West Africa, is now gathering pace,” a Feb. 3 assessment by global strategic analysts Oxford Analytica observed.

“The discovery of hydrocarbon reserves along Africa’s eastern seaboard remains dwarfed by those on the Atlantic coast. They have also taken longer to locate than the early pioneers had hoped. “However, the oil industry majors — stung by the discoveries in Ghana and Uganda in areas they had long discounted — are reluctant to repeat the error, which is likely to help sustain interest in exploration in the east.”

In Tanzania, the main operator of the offshore Songo Songo gas field is the Toronto-listed Orca Exploration through its subsidiary PanAfrica Energy, in cooperation with the state-run Tanzania Petroleum Development Corp. and Bermuda’s Globeleq.

Orca plans to boost production by 60 percent by next year to meet Tanzania’s burgeoning demand for energy. The country has a generating capacity of 1,300 megawatts but can only produce 850MW, which entails power rationing.

Ophir Energy of London operating with BG International, also London-listed, says it made two significant gas strikes in the northern Rovuma Basin in 2010. France’s Maurel and Prom is exploring in that region, too.

To the south in the former Portuguese colony of Mozambique, production is limited to a pair of onshore fields.

But the state-owned oil and gas company, Empresa Nacional de Hidrocarburos, is to start drilling in central Mozambique’s Buzi field soon.

The Andarko Petroleum Corp., of The Woodlands, Texas, reported making three strikes in 2010 on the Mozambique sector of the Rovuma Basin. These are still being evaluated but Oxford Analytica noted that they “have changed the profile of East African natural gas potential.”

It concluded: “Combining Mozambique and Tanzania’s natural gas potential to supply a new regional gas pipeline network will take many years and require substantial investment.

“However, the precedent set by the West African Gas Pipeline demonstrates that such a project is politically and technically feasible.

“Construction of a new LNG export terminal to supply rising Asian energy demand — while significantly more ambitious — is likely to be tempting due to the region’s relatively shorter transshipment routes to eastern energy markets.”

In Uganda, the big Lake Albert oil field, discovered in 2006 by London’s Tullow Oil, is expected to start production later this year. It’s slated to reach 150,000-350,000 barrels per day.

Lake Albert, which lies in the center of Africa between Uganda and the Democratic Republic of Congo, is estimated to contain up to 6 billion barrels of oil but wars and political instability in the region could crimp exploration efforts, particularly in Somalia, the DRC and insurgency-ridden Ethiopia.

However, the prizes to be had may make the risk of operating in these zones irresistible.

Somalia, which has been wracked by war since the fall of dictator Mohammed Siad Barre in 1991, could contain as much as 10 billion barrels of oil.

Tanzania, partners discuss construction of gas pipeline to Mombasa

22 January 2011 (Source: Guardian IPP Reporter, Dar es Salaam, Tanzania

Recent discoveries of natural gas off the coast of Tanzania have taken the East African nation’s total reserves to 7.5 trillion cubic feet, sufficient to allow exports to the region, the East African Community said.

Tanzania and the regional grouping are discussing the possibility of building a pipeline from the commercial hub of Dar es Salaam north through Tanga to Mombasa, Kenya, according to a statement e-mailed to Bloomberg from the body.

Earlier reports last year said the Toronto-listed Orca Exploration (ORCb.V) plans to raise daily natural gas production at the Songo Songo field in Tanzania by 60 percent by the end of 2012 amid growing domestic power demand.

The company’s 2009 annual report, seen by Reuters said infrastructure constraints limited production capacity to 90 million cubic feet a day.

The reports said a target for 2010 was to “assist … in planning a permanent expansion of the infrastructure system to 144 million cubic feet … with the intention that the extra capacity will become operational by the end of 2012.”

The company said in November it saw capacity reaching 140 million cubic feet daily within two years.

Demand for power is surging in east Africa’s second largest economy and Tanzania is expected to save billions of dollars over the next 20 years using natural gas instead of oil imports.

Orca said it planned this year to increase its gas processing and transportation capacity on a temporary basis to 105 million cubic feet per day.

“To increase the overall capacity of the infrastructure system to operate at 200 mmcfpd, a twin onshore pipeline will need to be constructed. The timing of this will be dependent on the increase in gas demand, but it is forecast to be required by 2015/16,” the reports said.

Orca operates the Tanzanian project via its wholly-owned subsidiary PanAfrican Energy and in cooperation with power company Songas, a consortium including state-run Tanzania Petroleum Development Corporation and Bermuda-based Globeleq.

It supplies the gas to 35 industrial customers and for power generation for the national grid by Songas and state-run Tanzania Electric Supply Company.

“Based on the current reserves and anticipated field deliverability profiles, Orca intends to develop gas markets that will utilise approximately 100 to 120 million cubic feet of additional gas on an average annual basis.” said the reports.

New Trend Africa reported recently that natural gas production at Songo Songo in Lindi will be doubled to meet the growing demand of gas for electricity generation and for vehicles.

Production of gas from 5 out of 11 wells at Songo Songo is currently at the rate of 70 mm standard cfpd but processing facilities are inadequate. Plans are underway to expand the processing capacity to 140 mm cfpd so that more gas could be shipped to Dar es Salaam for additional power generation, compressed natural gas (CNG) for vehicles, industries and domestic use.

The plans are contained in a report by Tanzania to the 4th East African Petroleum Conference where Tanzanian officials to the three-day conference were led by the minister foe Energy and Minerals, William Ngeleja.

The offshore Songo Songo natural gas fields were discovered in 1974 and gas production started in July 2004. According to Tanzania Petroleum Development Corporation, in order to double gas production at Songo Songo, more wells have to be drilled to the north and west of the island to increase reserves for the growing multiple use of natural gas.

Gas production at the Mnazi Bay in Mtwara region is currently estimated at 0.9 mm cfpd and is used for generating 4.5 MW of electricity for Mtwara and Lindi.

Engineer Joyce Kisamo told the conference organised by the East African Community secretariat that natural gas was ideal as a source of energy in urban areas because it is environment friendly. According to her, Tanzania currently has four gas sites at Songo Songo (1974), Mnazi Bay (1982), Mkuranga (2007) and Nyuni (2008).

More gas fields are likely to be discovered given the production sharing agreements the Government has signed with more than 20 oil and gas exploration companies. Eng. Kisamo said the Government’s long term plans were to use natural gas for electricity generation and for cooking.