Orca Exploration Announces Operational Update
TORTOLA, British Virgin Islands, Oct. 30, 2023 — Orca Energy Group Inc. (“Orca” or the “Company” and includes PanAfrican Energy Tanzania Limited (“PAET”) and its other subsidiaries, and affiliates) (TSX-V: ORC.A, ORC.B) today announces an operational update. All amounts are in United States dollars (“$”) unless otherwise stated.
OPERATIONAL
Production, Sales and Demand
• Gross conventional natural gas production, including fuel gas, was in line with forecasts and averaged 124.8 million cubic feet per day (“MMcfd”) for Q3 2023, of which 82.9 MMcfd was Additional Gas (“AG”). Gas deliveries decreased by 2% for Q3 2023 compared to Q2 2023 and increased by 4% for the nine months ended September 30, 2023 compared to the same prior year period. The decrease for Q3 2023 was primarily due to declining production from the currently producing wells and reservoir compartments in the Songo Songo field.
• Despite declining production, increased gas demand is now seen as part of a long term requirement of the Tanzanian Ministry of Energy, the Tanzania Petroleum Development Corporation (“TPDC”) and the Tanzanian Electric Supply Company Limited (“TANESCO”) for gas supply to support growing power demand, following the commissioning in late 2022 of new gas fired generation capacity and increased power distribution through the national grid. As a result of less consistent rainfall in Tanzania in recent years, resulting in lower average output of hydropower, this new gas fired capacity is being used on a more continuous base load basis than had been expected.
• Orca currently forecasts average AG gas sales for 2023 to be within the revised range of 85 – 90 MMcfd, compared to full year sales for 2022 sales of 86.8 MMcfd, due to declining production.
• Average production guidance (AG) for 2024 is forecast to be in the range of 80 – 90 MMcfd for the full year, based on current contracted volumes and the end of the Protected Gas (“PG”) regime on July 31, 2024.
• Discussions are ongoing with Songas Limited (“Songas”) and Tanzania Portland Cement Company Ltd (“TPCLC”) to negotiate new commercial terms under the gas agreement between the Company, Songas and TPCLC (the “Gas Agreement”) from August 1, 2024 to supply the volumes which are currently despatched as PG.
Field Development Activities
• 3D Seismic – The third party contractor responsible for the seismic program has suspended operations. As a result, PAET has issued a breach of contract notice to the contractor. The contractor has failed to remedy the breach under its agreement with PAET. The Company has therefore terminated the contract on October 25, 2023.
• Facilities Management – Optimization studies have identified opportunities to improve the efficiency of operations at the Songas plant. A work program to deliver the initial benefits of this is now being planned for implementation during 4th quarter of 2023 which is estimated to cost approximately US$100,000. Production improvement of 5-10 MMcfd is forecasted to be achievable from this work commencing in December 2023 which could benefit production and sales in
2024.
• Common Inlet Manifold Project – A project is planned to install a new common well inlet manifold during 2024. This will improve flow efficiency of wells to both the Songas and the National Natural Gas Infrastructure plants to optimize deliverability of low versus high pressure wells into the production system.
• Well SS-7 Intervention – Subject to equipment availability and necessary approvals, an intervention in offshore well
SS-7 is planned to take place in 1st quarter 2024. The total expected cost of the project is US $8.5 million. The work program is designed to shut off water production which has caused the shut in of the well since 2019. The cause of the water production is interpreted to be a failed cement bond outside the production liner which has been allowing the flow of water into the well when it is placed on production. If successful, SS-7 is expected to initially deliver 20-25 MMcfd from the non-producing southern compartment.
• Production Logging – A production logging programme is being planned for 1st quarter 2024. The total estimated cost is US $1 million. This will provide information additional to the annual pressure surveys to enable improved accuracy of forecasting future reservoir performance. Key targeted wells include SS-3, SS-5, SS-7 and SS-10. SS-4 may also be included to further understand the results of the sidetrack carried out in 2021.