Orca Energy Group Ord Shs Class A V.ORC.B

Operational update, Q1 quarterly cash payment declared ...

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operational update : see below , in addition, another 10 cent cash payment declared end of Q1..dwdc


TORTOLA, BRITISH VIRGIN ISLANDS – February 23, 2022: 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. Jay Lyons, Chief Executive Officer, commented:  “I am pleased to report that Orca continues to make strong operational progress in Tanzania, as seen with the successful connection of our compression system to the Songo Songo gas plant. Our compression system has the potential to play an important role in assisting Tanzania’s burgeoning industrial and commercial sectors. This $42 million project which was three plus years in the planning and execution, ensures that Tanzania continues to benefit from a reliable supply of natural gas, which aligns Orca and PAET with the Government of Tanzania’s plans to increase access to electricity, enabling the country to continue on its economic growth trajectory.  We are also progressing our other operational work programs, including a $22 million multi-well workover program and a $20 million 3D seismic acquisition campaign that is expected to occur in Q3 2022, all of which will help drive increased reliable gas volumes to Tanzania and deliver value for our wider stakeholders. We look forward to updating the market further on these initiatives and others as they progress, along with our 2021 Results in April 2022.”

OPERATIONAL

Compression

• Installation of inlet compression at Orca  operated Songo Songo (“SS”) gas plant nearing completion following the successful connection of new compressors during a scheduled 10 day gas plant shut down, which was completed two days early (February 1 to February 8, 2022).
• With the support and coordination of the Minister of Energy, the Tanzania Petroleum Development Corporation (“TPDC”) and the Tanzania Electric Supply Company (“TANESCO”), the 10 day shutdown period was scheduled to occur from February 1 to February 10, 2022, in order to minimize customer disruptions while upgrading the SS gas plant to provide increased system gas deliverability to meet growing demand.
• In cooperation with TPDC the Company successfully increased SS gas supply to the TPDC operated National Natural Gas Infrastructure (“NNGI”) gas plant from ~38 MMcfd to ~92 MMcfd during the SS gas plant shut down, minimizing downstream impact by ensuring TANESCO could minimize disruptions to power generation.
• Following the planned shutdown, SS field production has been restored to the pre-shut down levels.
• Targeting the startup of the inlet compression project one month early in mid-March 2022, following commissioning and testing procedures.
• Concurrently, the Company completed the annual SS gas plant maintenance program during the planned shutdown period, which should preclude any additional planned plant shutdowns for maintenance in 2022.

Workover Program

• The well work over program is progressing with the work on the SS-3 and SS-4 wells completed.  The SS-3 well was placed on production on February 15, 2022, at an initial production rate of 15 MMcfd.  It is expected that the SS-4 well will be placed on production by month end following the rig move to the SS-10 well and reconnection of the SS-4 well to the SS gas plant.
• The three well program included reactivation of the SS-3 and SS-4 wells to increase production and the replacement of production tubing strings in the three wells with new chrome alloy tubing to mitigate internal corrosion in accordance with the Company’s integrity management system.

Seismic Program

• Strong progress made with the 2022 Songo Songo 3D seismic acquisition program budgeted at $20 million, with Orca targeting a Q3 2022 acquisition period. As previously stated, the 3D seismic program is required to de-risk both the future development drilling in the SS gas field and potential exploration drilling of prospective resources.

Production

• Additional Gas, as defined in the PSA (as defined herein) (“gas sales”) averaged ~71 MMcfd during Q4 2021 which increased average gas sales to 61 MMcfd for 2021, representing a 5.9% increase from 2020.
• 2022 production started strongly, with gross gas sales averaging ~74MMcfd in January.
• Orca forecasts average gross gas sales of 70-76 MMcfd during 2022 representing a 10 MMcfd (~16%) increase to the Company’s prior forecasts of 60-66 MMcfd.  The increased gas demand forecast is primarily driven by encouraging discussions with the Ministry of Energy, TPDC and TANESCO to increase gas supply to new power generation facilities expected to be commissioned in 2022.

FINANCIAL

• Orca continues to benefit from a robust balance sheet, with cash and cash equivalents of $73 million (unaudited) and long-term loan of $44.6 million (unaudited) as at December 31, 2021.
• In accordance with the Company’s dividend policy, Orca anticipates maintaining its quarterly dividend.
• Orca paid total dividends on its Class A Common Voting Shares and Class B Subordinate Voting Shares of $6.4 million during 2021.
• In 2021, Orca purchased shares for $32.0 million pursuant to the Company’s substantial issuer bid (completed in January 2021) and normal course issuer bid (commenced in June 2021).