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Orca Energy Group Inc. Announces 2020 Year End Audited Financial Results

TORTOLA, British Virgin Islands, April 21, 2021 (GLOBE NEWSWIRE) — Orca Energy Group Inc. (“Orca” or the “Company” and includes its subsidiaries and affiliates) (TSX-V: ORC.A, ORC.B) today announces its audited financial results for the year ended December 31, 2020. All dollar amounts are in United States dollars unless otherwise stated.

(1)   Adjusted funds flow from operations is a non-GAAP financial measure. See non-GAAP measures.

Financial and Operating Highlights for the Three Months and Year Ended December 31, 2020

Three Months ended
December 31
% Change Year ended
December 31
% Change

(Expressed in $’000 unless indicated otherwise)

2020 2019 Q4/20 vs
Q4/19
2020 2019 Ytd/20 vs
Ytd/19
OPERATING
Daily average gas delivered and sold (MMcfd) 62.8 70.8 (11)% 57.7 63.1 (9)%
Industrial 12.4 13.1 (5)% 12.7 13.3 (5)%
Power 50.4 57.7 (13)% 45.0 49.8 (10)%
Average price ($/mcf)
Industrial 7.56 7.77 (3)% 7.44 7.97 (7)%
Power 3.52 3.44 2% 3.47 3.43 1%
Weighted average 4.32 4.24 2% 4.34 4.38 (1)%
Operating netback ($/mcf) (1) 3.22 2.73 18% 2.85 2.63 8%
FINANCIAL
Revenue 21,980 23,212 (5)% 77,874 85,595 (9)%
Net income attributable to shareholders 7,375 12,642 (42)% 27,761 24,718 12%
per share – basic and diluted ($) 0.28 0.37 (24)% 1.00 0.71 41%
Net cash flows from operating activities 19,369 5,051 283% 46,505 34,873 33%
per share – basic and diluted ($) 0.74 0.15 393% 1.67 1.00 67%
Adjusted funds flow from operations (1) 12,348 13,479 (8)% 39,144 43,213 (9)%
per share – basic and diluted ($) 0.47 0.39 21% 1.41 1.24 14%
Capital expenditures 16,315 1,014 1,509% 27,141 4,171 551%
Weighted average Class A and Class B shares (’000) 26,138 34,324 (24)% 27,818 34,931 (20)%
As at December 31
2020 2019 %
Change
Working capital (including cash) 74,236 106,972 (31)%
Cash and cash equivalents 104,190 93,899 11%
Investments in short-term bonds 44,756 (100)%
Long-term loan 54,246 54,057 0%
Outstanding shares (‘000)
Class A 1,750 1,750 0%
Class B 24,388 32,557 (25)%
Total shares outstanding 26,138 34,307 (24)%

(1)  Operating netback and adjusted funds flow from operations are non-GAAP financial measures. See non-GAAP Measures.

Jay Lyons, Interim Chief Executive Officer, commented:

“Despite the challenges 2020 presented from a macro and operational perspective, we are very pleased with Orca’s performance during the period. The higher than normal rainfall for the first eight months of the year impacted our gas delivery volumes, as there was an increase in hydropower generation. However, during the last four months of the year our volumes returned to normal levels, which had a positive impact on our revenues and cash flows.

The construction of our $38 million compression project has started, with all long-lead items now ordered. We continue to target completion in June 2022. We are working closely with our partners, the Tanzanian Petroleum Development Corporation and Songas Limited, to ensure that production continues to meet demand going forward.  The continued maintenance of a reliable gas supply from our Songo Songo field will be critical to sustaining economic growth in Tanzania, and we are proud of our role in ensuring the country’s energy security.

The overall objective of our business is to balance returns with the growth potential that we see in the Songo Songo field and we look forward to continuing our constructive dialogue with the Government of Tanzania in order to extend our licence beyond October 2026. This would allow us to partner, invest and support in the development of this important gas resource for the nation of Tanzania, as we have developed a deep and valuable understanding of the geology of the licence and remain committed to its development and optimization for all stakeholders.”

The complete Audited Consolidated Financial Statements and Notes and Management’s Discussion & Analysis may be found on the Company’s website www.orcaexploration.com or on the Company’s profile on SEDAR at www.sedar.com.

Reserve Report

The Company’s latest corporate reserve report is available on the Company’s website (www.orcaenergygroup.com) or on the Company’s profile on SEDAR at www.sedar.com.

Orca Energy Group Inc.

Orca Energy Group Inc. is an international public company engaged in natural gas development and supply in Tanzania through its subsidiary PanAfrican Energy Tanzania Limited. Orca trades on the TSX Venture Exchange under the trading symbols ORC.B and ORC.A.

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.

Abbreviations

Mcf thousand cubic feet
MMcfd million standard cubic feet per day

Non-GAAP Measures
The Company evaluates its performance using a number of non-GAAP (generally accepted accounting principles) measures. These non-GAAP measures are not standardized and therefore may not be comparable to similar measurements of other entities.

THREE MONTHS ENDED DECEMBER 31 YEAR ENDED DECEMBER 31    
$’000 2020 2019 2020 2019
Net cash flows from operating activities 19,369 5,051 46,505 34,873
Interest expense (2,370) (1,621) (7,887) (8,279)
Reversal of loss allowance – TANESCO arrears (3,478) (7,546) (19,905) (11,044)
Reversal of loss allowance – collection of disputed Songas receivables (1,046)
Loss allowance – TRA 5,337 5,337
Changes in non-cash working capital (6,510) 17,595 16,140 27,663
Adjusted funds flow from operations 12,348 13,479 39,144 43,213

FORWARD LOOKING INFORMATION – This news release contains forward-looking statements or information (collectively, “forward-looking statements”) within the meaning of applicable securities legislation. All statements, other than statements of historical fact included in this news release, which address activities, events or developments that Orca expects or anticipates to occur in the future, are forward-looking statements. Forward-looking statements often contain terms such as may, will, should, anticipate, expect, continue, estimate, believe, project, forecast, plan, intend, target, outlook, focus, could and similar words suggesting future outcomes or statements regarding an outlook. More particularly, this news release contains, without limitation, forward-looking statements pertaining to the following: the Company business objectives; the production at Songo Songo and whether such production can continue to meet demand; the Company’s expectations regarding timing for the completion of installation of compression on the Songas infrastructure; the expected expenditures required to complete the installation of the compression on the Songas infrastructure; the sustainability of economic growth in Tanzania and the ongoing dialogue with the Government of Tanzania with respect to extending the Company’s license and the anticipated effect of an extension of the Company’s license on the Company’s business. As a consequence, actual results may differ materially from those anticipated in the forward-looking statements. Although management believes that the expectations reflected in the forward-looking statements are reasonable, it cannot guarantee future results, levels of activity, performance or achievement since such expectations are inherently subject to significant business, economic, operational, competitive, political and social uncertainties and contingencies.

These forward-looking statements involve substantial known and unknown risks and uncertainties, certain of which are beyond the Company’s control, and many factors could cause the Company’s actual results to differ materially from those expressed or implied in any forward-looking statements made by the Company, including, but not limited to, reduced global economic activity as a result of the COVID-19 pandemic, including lower demand for natural gas and a reduction in the price of natural gas; the potential impact of the COVID-19 pandemic on the health of the Company’s employees, contractors, suppliers, customers and other partners and the risk that the Company and/or such persons are or may be restricted or prevented (as a result of quarantines, closures or otherwise) from conducting business activities for undetermined periods of time; the impact of actions taken by governments to reduce the spread of COVID-19, including declaring states of emergency, imposing quarantines, border closures, temporary business closures for companies and industries deemed non-essential, significant travel restrictions and mandated social distancing, and the effect on the Company’s operations, access to customers and suppliers, availability of employees and other resources; risk that contract counterparties are unable to perform contractual obligations; failure to receive payments from TANESCO; risk that the potential financial solutions to resolve the TANESCO arrears are not implemented by the Tanzanian government; the potential negative effect on the Company’s rights under the Company’s production sharing agreement (“PSA“) and other agreements relating to its business in Tanzania as a result of the Petroleum Act, passed in 2015 (the “Act“), and other recently enacted and future legislation, as well as the risk that such legislation will create additional costs and time connected with the Company’s business in Tanzania; risks regarding the uncertainty around evolution of Tanzanian legislation; risk that the Company will not be successful in appealing claims made by the Tanzanian Revenue Authority and may be required to pay additional taxes and penalties; the impact of general economic conditions in the areas in which the Company operates; civil unrest; the susceptibility of the areas in which the Company operates to outbreaks of disease; industry conditions; lack of availability of qualified personnel or management; fluctuations in commodity prices, foreign exchange rates and/or interest rates; stock market volatility; competition for, among other things, capital, drilling equipment and skilled personnel; failure to obtain required equipment for drilling; delays in drilling plans; failure to obtain expected results from drilling of wells; changes in laws and regulations including the adoption of new environmental laws and regulations, impact of new local content regulations and changes in how they are interpreted and enforced; imprecision in reserve estimates; the production and growth potential of the Company’s assets; obtaining required approvals from regulatory authorities; failure to install compression on the Songas infrastructure on the timeline anticipated; inability to extend the Company’s license beyond 2026; risks associated with negotiating with foreign governments; and unanticipated changes to legislation and the effect on the Company’s operations, including, but not limited to, the Act and the Natural Gas Pricing Regulation made under Sections 165 and 258(l) of the Act. In addition, there are risks and uncertainties associated with oil and gas operations. Therefore the Company’s actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurances can be given that any of the events anticipated by these forward-looking statements will transpire or occur, or if any of them do so, what benefits the Company will derive therefrom. Readers are cautioned that the foregoing list of factors is not exhaustive.

Such forward-looking statements are based on certain assumptions made by the Company in light of its experience and perception of historical trends, current conditions and expected future developments, as well as other factors the Company believes are appropriate in the circumstances, including, but not limited to, that the Company will be able to negotiate Additional Gas sales contracts in relation to the Additional Gas Plan 2; the ability of the Company to complete developments and increase its production capacity; the actual costs to complete the Company’s development program are in line with estimates; the TPDC, the Ministry of Energy and Mines and the Company are able to agree on commercial terms for future incremental gas sales and the Company can expand Songo Songo development beyond the existing Songas infrastructure and supply gas to the NNGI; that there will continue to be no restrictions on the movement of cash from Mauritius or Tanzania; the impact of the COVID-19 pandemic on the demand for and price of natural gas, volatility in financial markets, disruptions to global supply chains and the Company’s business, operations, access to customers and suppliers, availability of employees to carry out day-to-day operations, and other resources; that the Company will have sufficient cash flow, debt or equity sources or other financial resources required to fund its capital and operating expenditures and requirements as needed; that the Company will have adequate funding to continue operations; that the Company will successfully negotiate agreements; receipt of required regulatory approvals; the ability of the Company to increase production at a consistent rate; infrastructure capacity; commodity prices will not further deteriorate significantly; the ability of the Company to obtain equipment and services in a timely manner to carry out exploration, development and exploitation activities; future capital expenditures; availability of skilled labour; timing and amount of capital expenditures; uninterrupted access to infrastructure; the impact of increasing competition; conditions in general economic and financial markets; effects of regulation by governmental agencies; that the Company’s appeal of various tax assessments will be successful; that the enactment of the Act in Tanzania will not impair the Company’s rights under the PSA to develop and market natural gas in Tanzania; current or, where applicable, proposed industry conditions, laws and regulations will continue in effect or as anticipated as described herein; and other matters.

The forward-looking statements contained in this news release are made as of the date hereof and the Company undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

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