Orca Energy Group (including PanAfrican Energy Tanzania (“PAET“) and its other subsidiaries and affiliates) announces the approval of its Independent Reserves Evaluation as at December 31, 2023. All currency amounts in this news release are in United States Dollars ($) unless otherwise stated.

The Company’s conventional natural gas reserves as at December 31, 2023 for the period to the end of the primary 25-year term of the production sharing agreement (the “Songo Songo PSA“) with the Tanzanian Petroleum Development Corporation (the “TPDC“) have been evaluated by independent petroleum engineering consultants McDaniel & Associates Consultants Ltd. 

Highlights

• Total Proved (“1P”) Gross Company conventional natural gas reserves at year ended December 31, 2023, were 85 billion standard cubic feet (“Bcf“) compared to 141 Bcf at year end 2022, representing a 40% decrease.
• Total Proved plus Probable (“2P”) Gross Company conventional natural gas reserves at year ended December 31, 2023, were 94 Bcf compared to 167 Bcf at year end 2022, representing a 44% decrease.
• The reduction in Gross Company 1P reserves from year end 2022 to year end 2023 was primarily attributed to 2023 production, declining reservoir pressures, removal of development capital and the number of years remaining on the current term of the Songo Songo Licence.
• The reduction in Gross Company 1P reserves was partially offset by the 2023 acquisition of a 7.933% interest from Swala which increased the Company’s working interest share to 100% in the Songo Songo reserves.
• The Company estimated gas sales of 31 Bcf in 2023, representing an increase of approximately 7% compared to year end 2022. This level of sales has resulted in accelerated natural pressure declines in the core compartments of the Songo Songo gas field over what was forecasted at the beginning of 2023.
• In April 2023 PAET requested TPDC to apply for an extension to the Songo Songo Licence, as they are obliged to do under the terms of the Songo Songo PSA. Grant of an extension will enable ongoing investment to continue which will sustain production from existing compartments and bring additional pools in the field into production. Unfortunately, it appears as though TPDC has not made the application as at the date of the press release. Given the uncertainty associated with the extension of the Songo Songo Licence, it has been necessary to remove approximately US$55million of future development capital from the 2023 year end 1P reserve evaluation, as the associated projects are no longer economic in time remaining on the development licence (2.8 years from year end 2023). On this basis, the respective reserves associated with the removal of development capital have been reclassified as contingent resources pending receipt of a licence extension beyond October 2026 as provided for in The Petroleum Act, 2015 (the “Act“).
• Net present value of 1P future net revenue discounted at 10% was $108.4 million at year end 2023, compared to $147.2 million at year end 2022, representing a 26% decrease.
• Net present value of 2P future net revenue discounted at 10% was $118.7 million at year end 2023, compared to $170.7 million at year end 2022, representing a 30% decrease.
• The 26% reduction in net present value of 1P future net revenues from year end 2022 to year end 2023 was primarily attributed to lower reserves at year end 2023 and the associated 26% reduction in the number of years outstanding on the current Songo Songo Licence. The net present value impact of reserves reclassified to contingent resources was minimal due to the reduction in associated future development capital.

KeyFacts Energy: Orca Tanzania country profile