TSX-V: ORC.A, ORC.B
TORTOLA, British Virgin
Islands, Feb. 19, 2016 /CNW/
- Orca Exploration Group Inc ("Orca" or the "Company")
announces the successful completion of its offshore workover and
drilling program (the "Off-Shore Programme") and the release of the
Paragon M826 mobile drilling workover rig. The Off-Shore Programme
of the Songo Songo Main Field development programme (the
"development programme") included workovers on three existing wells
(SS-5, SS-7 and SS-9) and the drilling of one new development well,
SS-12. Phase 1 of the development programme also includes the
completion of the SS-12 production platform, flowlines and tie-in
facilities connecting SS-12 to the Company's gas processing
facilities and a refrigeration system required to ensure field
production stability to enable the Company to produce wells into
the newly built National Natural Gas Infrastructure Project
("NNGIP"). The total cost of Phase 1 of the development programme
was originally estimated to cost US$120
million, however, now that the Off-Shore Programme has been
completed, the Company expects that Phase 1 of the development
programme to have a total cost of under US$80 million with costs incurred to date of
approximately US$68 million. The
reduction in costs was a result of being able to successfully
workover the three wells without having to do any side-tracking,
efficiencies achieved during the work-overs, and work scope changes
which reduced the original estimated time required to complete
Phase 1. The full development programme provides for additional
workovers, compression systems and additional infrastructure to
ensure all production commitments are met through to the end of the
licence in 2026.
The Offshore Programme was designed to: (i) put safe existing
suspended and operating production wells; (ii) restore and increase
the current productive capacity of the Songo Songo Main Field to
ensure the continued delivery of Protected and Additional gas into
the existing Songas infrastructure; and (iii) provide additional
operational redundancy and deliverability for future additional gas
sales.
The Offshore Programme has successfully increased production
capacity from approximately 83 million standard cubic feet per day
("MMscfd") prior to the development programme to current production
capabilities of approximately 150 MMscfd. Upon completion of the
platform for SS-12 and the tie-in to production facilities,
production capabilities are expected to be in excess of 185 MMscfd.
The field is now capable of both filling the existing Songas
infrastructure to capacity of approximately 102 MMscfd, as well as
providing additional gas volumes to the NNGIP. The Company is
currently negotiating terms for the sales agreement to the NNGIP
with the Tanzania Production and Development Company ("TPDC").
Until the agreement is signed, the Company's production is limited
by infrastructure and contractual constraints, producing an average
of 90 MMscfd for the fourth quarter of 2015 and is expected to
average 94 MMscfd in 2016.
Orca currently supplies gas primarily for power generation to
the Tanzania Electric Supply Company ("TANESCO"), Songas, and 38
industrial customers in the Dar es Salaam area. Orca committed to
the current expansion programme to ensure that the Company is
playing its part in meeting Tanzania's urgent need for increased power
generation and energy security. The use of natural gas from the
Songo Songo Main Field has made a significant contribution to
Tanzania's economy and is
estimated to have saved Tanzania
over US$6 billion in other fuel costs
since commercial operations began in 2004 according to Tanzanian
government sources. Orca's Tanzania operations are managed by the
Company's wholly owned subsidiary, Pan African Energy Tanzania
Limited ("PAET"), headquartered in Dar es Salaam. PAET has for the
past 10 years been the lead private sector investor in Tanzania's gas industry.
"We are delighted with the success of the Offshore Programme and
the significant cost savings achieved, this reflects the strength
of our operation's team," said Orca's Chairman and Chief Executive
Officer, David Lyons, "The
development programme has enabled the Company to significantly
increase production capacity in Tanzania and ensure the continued reliable
supply of natural gas to our customers."
In order to complete the Off-Shore Programme, the Company's
wholly owned subsidiary, PAET has utilized the US$60 million loan facility with International
Finance Corporation which was signed on 29
October 2015 (the "Loan"). The final US$40 million drawdown of the Loan was received
today. For further details on the Loan, please see the copy of the
agreement for the Loan which is filed under Orca's issuer profile
on SEDAR at www.sedar.com.
About Orca Exploration Group Inc.
Orca is an international public company engaged in natural gas
exploration, development and supply in Tanzania through its wholly-owned subsidiary,
PAET. Orca trades on the TSX Venture Exchange under the trading
symbols ORC.A and ORC.B.
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
This news release contains forward-looking information. More
particularly, this news release contains statements and information
concerning, but not limited to, the terms and design of the
Off-Shore Programme and the full development programme; the
expected total cost of the development programme; the Company's
future plans in respect of the development programme, including
additional costs that may be incurred and additional workovers,
compression systems and infrastructure to ensure production
commitments are met through the end of the license; the status of
the tie-in agreement to the NNGIP with TPDC and the effect on the
Company's production capability; the Company's expected production
volumes for 2016; the Company's plans for the funds received on
drawdown of the Loan; and other matters. Although management
believes that the expectations reflected in the forward-looking
information are reasonable, it cannot guarantee future agreement,
levels of activity, performance or achievements since such
expectations are inherently subject to significant uncertainties
and contingencies. As a consequence, actual results may differ
materially from those anticipated in the forward-looking
information.
Forward-looking information involves substantial known and
unknown risks and uncertainties, certain of which are beyond Orca's
control, and many factors could cause the actual results to differ
materially from those expressed or implied in the forward-looking
information presented by Orca, including, but not limited to: risk
that Orca is unable to access the additional funding required to
proceed with the entire development programme; risk that the
drilling rigs fail to fulfill the terms of drilling contracts;
failure to enter into a tie-in contract to the NNGIP with TPDC;
inability to achieve full production capability due to
infrastructure constraints; risk that the development programme is
not completed as planned and the actual cost to undertake the
development programme exceeds the Company's estimates; risk that
the contingencies related to the development work for the full
field development plan for Songo Songo Main Field are not
satisfied; the impact of general economic conditions in the areas
in which Orca operates; changes in laws and regulations including
changes in how they are interpreted and enforced; the lack of
availability of qualified personnel or management; fluctuations in
commodity prices, foreign exchange and/or interest rates; stock
market volatility; obtaining certain required contractual approvals
and approvals of certain regulatory authorities; risks associated
with negotiating with foreign governments; risk that the Company
will be required to pay additional taxes and penalties; delays in
drilling plans; failure to obtain expected results from drilling;
inability to access sufficient capital; and risk that the Company
will not be able to fulfill its obligations, including under the
Loan. Actual results, performance or achievements could differ
materially from those expressed in, or implied by, the
forward-looking information and, accordingly, no assurances can be
given that any of the events anticipated by the forward-looking
information will transpire or occur, or if any of them do so, what
benefits Orca will derive therefrom. Readers are cautioned that the
foregoing list of factors is not exhaustive.
Such forward-looking information is based on certain
assumptions made by Orca in light of its experience and current
knowledge of the circumstances, as well as other factors Orca
believes are appropriate in the circumstances, including, but not
limited to: that the Company will have all necessary regulatory and
contractual approvals related to certain aspects of the Offshore
Programme and the Loan; that the Company will have sufficient cash
flow, debt or equity sources or other financial resources required
to fund its operations; that the Company will have access to the
additional funding required to proceed with the entire development
programme; that the Company and TPDC will agree to the terms of a
tie-in agreement for the NNGIP; the estimated cost to undertake the
development programme; infrastructure capacity; the ability of Orca
to obtain equipment and services in a timely manner to carry out
exploration, development and exploitation activities; future
capital expenditures; availability of skilled labour; conditions in
general economic and financial markets; commodity prices will not
further deteriorate significantly; current or, where applicable,
proposed industry conditions, laws and regulations will continue in
effect or as anticipated; and other matters.
The forward-looking information contained in this news
release is made as of the date hereof and Orca undertakes no
obligation to update publicly or revise forward-looking
information, whether as a result of new information, future events
or otherwise, unless so required by applicable securities
laws.
SOURCE Orca Exploration Group Inc.
