TSX-V: ORC.A, ORC.B
TORTOLA, British Virgin
Islands, Oct. 29, 2015 /CNW/ - Orca Exploration
Group Inc. ("Orca" or the "Company") announces that it has entered
into a loan agreement with International Finance Corporation
("IFC"), a member of the World Bank Group, for a US$60 million investment (the "Loan") in the
Company's operating subsidiary, PanAfrican Energy Tanzania Limited
("PAET").
Proceeds of the Loan will be used to fund part of an estimated
US$120 million first phase of a Songo
Songo Main Field development programme (the "Off-Shore Programme")
currently being undertaken using the Paragon M826 drilling rig
(commenced in September 2015). The
Off-Shore Programme is 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, by way of the workover and recompletion, abandonment or
sidetrack drilling of three existing offshore wells, and/or the
drilling of additional production gas wells at locations to be
determined in the region of the existing offshore wells depending
on the outcome of the workovers. Since programme
commencement, previously suspended production wells SS-5 and SS-9
have been successfully worked over and recompleted, and have been
restored to full productive capacity estimated to be approximately
35 MMscfd per well.
The Off-Shore Programme is intended to restore and expand field
productive capacity from approximately 83 million standard cubic
feet per day ("MMscfd") prior to the programme to approximately 190
MMscfd on completion of the programme. When completed, the field is
expected to be capable of both filling the existing Songas
infrastructure to capacity of approximately 102 MMscfd, as well as
providing additional gas volumes to the newly commissioned National
Natural Gas Infrastructure Project ("NNGIP") as and when
contracted.
The term of the Loan is 10-years, with no repayment of principal
for the first seven years, followed by a three-year amortization
period. The Loan is an unsecured subordinated obligation of
PAET and is guaranteed by Orca to a maximum of US$30 million. The guarantee may only be
called upon by IFC at maturity in 2025 and, subject to (among
others) IFC approval, Orca may issue shares in fulfillment of all
or part of the guarantee obligation in 2025, subject to receipt of
all required regulatory approvals.
Base interest on the Loan is payable quarterly at 10% per annum
on a 'pay-if-you-can-basis' using a formula to calculate the net
cash available for such payments as at any given interest payment
date. In addition, an annual variable participatory interest
equating to 7% of the cash flow of PAET net of capital expenditures
is payable in respect of any given year, commencing with
2016. Such participatory interest survives the repayment
and/or maturity of the Loan until 15 October 2026. It is also
detachable from the Loan and accordingly can be transferred
independently. Dividends and distributions from PAET to Orca
are restricted during the term of the Off-Shore Programme and at
any time that any amounts of unpaid interest, principal or
participating interest are outstanding.
The Loan is available subject to the fulfilment of certain
conditions, which include attending to the registration of the Loan
with the Bank of Tanzania and
W. David Lyons entering into
arrangements, satisfactory to IFC, whereby he will commit (directly
or indirectly) not to reduce his beneficial ownership in Orca in a
way that would result in him having less than 51% of the voting
rights therein.
"The conclusion of the IFC financing is a significant
achievement for Orca and an important endorsement of the Company's
continuing commitment to Tanzania," commented W. David Lyons, Orca Chairman and Chief
Executive Officer. "It allows us to raise finance and manage risk
in the face of a challenging business environment, and to undertake
urgently needed development of the Songo Songo field. It further
safeguards Songo Songo's future as an important part of
Tanzania's energy security.
The World Bank was instrumental in bringing the Songo Songo
gas-to-electricity project to reality some 20 years ago and Orca is
pleased to continue this long-term relationship, now directly with
IFC, in support of the sustainable development of Tanzania's energy resources."
"The Songo Songo field is Tanzania's most important source of proven
natural gas production, and is the largest supplier of energy to
the Dar es Salaam region" said Lance
Crist, IFC Global Head of Natural Resources. "Through this
investment, IFC is working to help to alleviate electricity
shortages in Tanzania, which are
an impediment to the country's continued economic growth and
development."
About IFC
IFC, a member of the World Bank Group, is the largest global
development institution focused on the private sector in emerging
markets. Working with more than 2,000 businesses worldwide, IFC
uses its capital, expertise, and influence to create opportunity
where it's needed most. In FY15, IFC's long-term investments in
developing countries rose to nearly $18
billion, helping the private sector play an essential role
in the global effort to end extreme poverty and boost shared
prosperity. For more information, visit www.ifc.org.
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
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.
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 of the Loan; the terms
and design of the Off-Shore Programme, including the estimated cost
of the first phase of the Off-Shore Programme, the effect of the
Off-Shore Programme on restoring and expanding field productive
capacity and the anticipated amount of the increase in field
productive capacity; Orca's expectations that when the Off-Shore
Programme is completed that it will be capable of both filling the
existing Songas infrastructure to capacity and providing additional
gas volumes available to the newly commissioned NNGIP as and when
contracted; the estimated full productive capacity of production
wells SS-5 and SS-9; the conditions precedent to availability of
the Loan; Orca's ability to issue shares in 2025 in fulfillment of
all or part of its guarantee obligations under 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: the
failure to satisfy the conditions precedent to availability of the
Loan; risk that the Paragon M826 drilling rig fails to fulfill the
terms of the drilling contract; failure to restore and expand field
productive capacity under the Off-Shore Programme; risk that Orca
is unable to access the additional funding required to proceed with
the entire Off-Shore Programme; failure to achieve the anticipated
level of field productive capacity under the Off-Shore Programme;
risk that the Off-Shore Programme, when completed, is not capable
of both filling the existing Songas infrastructure to capacity and
providing additional gas volumes available to the newly
commissioned NNGIP as and when contracted; risk that the Off-Shore
Programme is not completed as planned and the actual cost to
undertake the Off-Shore Programme exceeds the Company's estimates;
risk that the contingencies related to the development work for the
full field development plan for Songo Songo are not satisfied;
failure to receive all required regulatory approvals for Orca to
issue shares in 2025 in fulfillment of all or part of its guarantee
obligations under the Loan; 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 conditions precedent to availability of the
Loan will be satisfied; the availability of the proceeds of the
Loan to fund the Off-Shore Programme; that the Company will have
all necessary regulatory and contractual approvals related to
certain aspects of the Off-Shore 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 Off-Shore Programme; that the Company can
expand Songo Songo development beyond the existing Songas
infrastructure and supply gas to the NNGIP; the estimated cost to
undertake the Off-Shore 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.