Orca Energy Group Inc. ("Orca" or the "Company" and includes its subsidiaries and affiliates) announces that it has permanently prepaid the US$60 million investment (the "Loan") made by International Finance Corporation ("IFC") in the Company's operating subsidiary, PanAfrican Energy Tanzania Limited ("PAET"), pursuant to a loan agreement dated October 29, 2015 among IFC, PAET and the Company (the "Loan Agreement"). To effect the foregoing prepayment, the Company paid to IFC US$30.6 million, representing the aggregate outstanding principal of the Loan together with all accrued interest thereon and all other amounts owing in connection with the Loan as of February 21, 2025.
As of the date hereof, the annual variable participating interest granted by PAET to IFC under the terms of the Loan Agreement remains outstanding.
In addition, Orca announces PAET has reached an agreement with Tanzania Petroleum Development Corporation ("TPDC") and the Tanzania Portland Cement Company Limited ("TPCC") in respect to the SGSA (defined below). In 2008, PAET, TPDC and TPCC signed a Gas Sale Agreement ("2008 GSA") for the supply of Additional Gas (defined below) to TPCC's Wazo Hill plant ("Wazo Hill"). At the same time, TPDC supplied Protected Gas (defined below) to Wazo Hill. In anticipation of the cessation of Protected Gas on July 31, 2024, PAET and TPCC negotiated a Supplementary Gas Sales Agreement ("SGSA") to supply to Wazo Hill increased volumes of gas to replace Protected Gas. The SGSA is arranged to operate alongside the original 2008 GSA.
The price of natural gas sold to TPCC is based on the contracted prices as set out in the Amendment Agreement No 2 to the 2008 GSA agreed to in October 2017, plus an estimation of the Songas transportation tariff as determined by the energy regulator, Energy and Water Utilities Regulatory Authority. The gas price under the SGSA is lower than that of the 2008 GSA, affording TPCC a commercially viable blended gas price across the two contracts. Initially, TPDC opposed the SGSA, but an agreement was reached with TPDC in January 2025 and the SGSA was executed, effective August 1, 2024.
"Additional Gas" and "Protected Gas" as used in the 2008 GSA and SGSA are defined in the Songo Songo Production Sharing Agreement between TPDC, the Government of Tanzania and PAET and the Gas Agreement between the Government of Tanzania, TPDC, Songas Limited ("Songas") and PAET.
In addition, Orca announces it has received a judgment (the "Judgment") from the Tanzanian High Court (Commercial Division) (the "Court") for a claim brought by a contractor against PAET. The claim was brought by the contractor for losses arising from PAET's termination of a contract relating to the Company's 3D seismic acquisition program. The contract was signed in 2022 and works were due to be completed by the end of 2022. However, work only commenced in 2023 and was never completed. Pursuant to the Judgment, the Court ordered specific and general damages in the aggregate of US$23,100,451, plus legal costs and interest at a rate of 7% per annum be paid by PAET to the contractor. PAET respectfully disagrees with the Judgment and is currently preparing to launch an appeal. It is likely PAET will be required to post-security for the full amount of the judgment until the appeal is resolved.
Jay Lyons, Chief Executive Officer, commented:
“We are pleased to have successfully prepaid our US$60 million loan with the IFC. We are grateful to the IFC for their financial support with developing the Songo Songo Field for the benefit of the nation of Tanzania. While we acknowledge the Judgment awarded by the Commercial Court regarding the claim by the contractor, we intend to seek a review of the decision and appeal the Judgment, as the Board remain of the view that the Company’s actions with regard to termination of the contract for the 3D seismic program were legally fair and just.
Taking into account these recent events, Orca continues to possess a robust cash position and is performing in line with previous guidance operationally.”