Orca Exploration announces Q2 2013 results

TSX-V: ORC.A, ORC.B

TORTOLA, British Virgin Islands, Aug. 28, 2013 /CNW/ - Orca Exploration Group Inc. ("Orca" or "the Company") announces its results for the second quarter ended 30th June 2013.

Highlights

  • A total of US$35.2 million has been received from TANESCO since the end of Q1 2013 - US$19.8 million during Q2 and a subsequent payment of US$15.4 million in July 2013.

  • At 30 June 2013, TANESCO owed the Company US$46.3 million including arrears of US$39.7 million (31 March 2013: US$48.8 million, including arrears of US$44.0 million). Current TANESCO arrears are US$31.2 million.

  • Additional Gas sales continued near field capacity during Q2 averaging 58.4 MMcfd being an increase of 6% over  the prior period (Q2 2012: 54.9 MMcfd) and down 5% over Q1 2013 (61.6 MMcfd).

  • Industrial sales volume decreased by 11% to 11.7 MMcfd from 13.1 MMcfd in Q1 2013. Power sector sales volumes during Q2 averaged 46.7 MMcfd down 4% over Q1 2013 at 48.5 MMcfd.

  • Average Industrial gas price for the quarter was US$8.60/mcf up 11% from Q1 2013 (US$7.78/mcf) and Power sector gas prices averaged US$3.63/mcf for the quarter up 2% over Q1 2013 price of US$3.55/mcf.

  • Cost pools were depleted in Q4 2012, which together with capital spending of only US$0.1 million adding to cost pools, constraining earnings and funds from operations. Accordingly, revenue of US$12.0 million was down 9% over Q1 2013 (US$13.2 million).

  • Stronger gas sales prices and cost reductions drove Q2 funds from operations before working capital changes of US$10.5 million (US$0.30 per share diluted), up 20% from Q1 2013 (US$8.7 million or US$0.25 per share diluted).

  • Q2 posted a loss of US$6.8 million or US$0.19 per share diluted, down 331% from Q1 2013 earnings of US$3.0 million or US$0.08 per share diluted. Whilst the Company continues to believe it will collect the full TANESCO receivable, the outstanding amount has been discounted by US$7.9 million reflecting the time value of money resulting from delays in collection, such charge applied directly to earnings.

  • Working capital decreased by 59% during the quarter to US$22.5 million as at 30 June 2013 (US$54.8 million as at 31 March 2013) as a consequence of reclassifying that portion of TANESCO receivables in excess of 60 days as a long-term receivable and providing US$7.1 million for doubtful accounts.

  • Substantive negotiations to conclude an agreed form of amendment to the Songo Songo Production Sharing Agreement (PSA) and resolution of the remaining issues continued with the Government Negotiating Team (GNT) - the Company has committed to work together with the Government to expedite the conclusion of these negotiations.

  • Active negotiations which commenced in April 2013 with the Tanzania Petroleum Development Corporation (TPDC) in its capacity as gas aggregator and continued during the quarter and subsequent regarding a long-term sales agreement for incremental gas volumes of up to approximately 110 MMcfd.

  • The Company has continued in good faith during the quarter preparing a full field development plan for Songo Songo whilst issues are being resolved, and in July 2013 submitted a plan to the Ministry of Energy and Minerals. The execution of the plan, including workovers of existing wells and the drilling of an additional production well SS-12, continue to be on hold until TANESCO arrears and surety of payments is addressed, GNT issues are fully resolved and acceptable commercial terms for the sale of incremental gas has been agreed.

Financial and Operating Highlights

           
Three months ended/As at 30-Jun-2013 30-Jun- 2012 % Change 31-Mar 2013 % Change
           
Financial (US$000 except where otherwise stated)          
Revenue 11,996 16,914 (29) 13,197 (9)
Profit/(loss) before taxation (8,509) 8,672 (198) 4,660 (283)
Operating netback (US$/mcf) 2.10 2.56 (18) 2.15 (2)
Cash and cash equivalents 18,752 20,194 (7) 13,421 40
Working capital (1) 22,527 38,689 (42) 54,758 (59)
Shareholders' equity 122,068 118,938 3 128,885 (5)
Total comprehensive income (6,817) 5,167 (232) 2,950 (331)
Earnings per  share - basic  (US$) (0.19) 0.15 (227) 0.08 (338)
Earnings per  share - diluted (US$) (0.19) 0.15 (227) 0.08 (338)
Funds flow from operating activities 10,546 9,982 6 8,699 21
Funds per share from operating activities  - basic  (US$) 0.30 0.29 7 0.25 20
Funds per share from operating activities  - diluted (US$) 0.30 0.28 7 0.25 20
Net cash flows from operating activities 8,101 5,689 42 (5,748) 241
Net cash flows per share from operating activities - basic (US$) 0.23 0.16 44 (0.17) 235
Net cash flows per share from operating activities - diluted (US$) 0.23 0.16 44 (0.16) 244
           
Outstanding Shares ('000)          
Class A shares 1,751 1,751 0 1,751 0
Class B shares 32,892 32,892 0 32,892 0
Options 1,922 2,172 12 1,922 0
           
Operating          
Additional Gas sold (MMcf) - industrial 1,067 829 29 1,176 (9)
Additional Gas sold (MMcf) - power 4,250 4,172 2 4,363 (3)
Additional Gas sold (MMcfd) - industrial 11.7 9.1 29 13.1 (11)
Additional Gas sold (MMcfd) - power 46.7 45.8 2 48.5 (4)
Additional Gas sold (MMcfd) 58.4 54.9 6 61.6 (5)
Average price per mcf (US$) - industrial 8.60 10.14 (15) 7.78 11
Average price per mcf (US$) - power 3.63 2.80 30 3.55 2
           
         
  1. Working capital as at 30 June 2013 includes a TANESCO receivable of US$11.5 million (31 December 2012: US$33.3 million) and a net Songas receivable of US$5.2 million (31 December 2012: US$5.9 million). Given the payment pattern, US$34.9 million of TANESCO receivables in excess of 60 days have been discounted by US$7.9 million and classified as long-term receivables. Total long and short-term TANESCO receivables as at 30 June 2013 total US$46.3 million prior to discounting. Subsequent to the end of the quarter, TANESCO paid US$15.4 million, and the current TANESCO arrears total US$31.2 million.

Condensed Consolidated Interim Statement of Comprehensive Income/(Loss)
(Unaudited)

ORCA EXPLORATION GROUP INC.

      THREE MONTHS ENDED SIX MONTHS ENDED
             
US$'000s except per share amounts NOTE   30 Jun
2013
30 Jun 2012 30 Jun
2013
30 Jun 2012
             
Revenue 4   11,996 16,915 25,193 34,121
Cost of sales            
Production and distribution expenses     (620) (1,813) (1,414) (3,127)
Depletion expense 9   (2,612) (2,017) (5,335) (3,955)
             
      8,764 13,085 18,444 27,039
General and administrative expenses     (3,430) (4,362) (6,960) (8,026)
Provision for doubtful accounts 7   (7,100) - (7,100) -
Net finance costs 5   (6,743) (51) (8,233) (188)
             
Profit/(Loss) before taxation     (8,509) 8,672 (3,849) 18,825
Taxation 6   1,943 (3,505) 57 (7,266)
             
Profit/(Loss) after taxation     (6,566) 5,167 (3,792) 11,559
Foreign currency translation gain from foreign operations     (251) - (75) -
             
Total comprehensive income/(loss) for the period     (6,817) 5,167 (3,867) 11,559
             
Earnings per share            
Basic (US$) 12   (0.19) 0.15 (0.11) 0.33
Diluted (US$) 12   (0.19) 0.15 (0.11) 0.33
             
           

See accompanying notes to the condensed consolidated interim financial statements.

Condensed Consolidated Interim Statement of Financial Position (Unaudited)

ORCA EXPLORATION GROUP INC. 

    AS AT
US$'000s NOTE 30 Jun 2013 31 Dec 2012
ASSETS      
Current Assets      
Cash and cash equivalents   18,752 16,047
Trade and other receivables 7 48,852 73,495
Taxation receivable 6 14,285 14,692
Prepayments   429 246
    82,318 104,480
Non-Current Assets      
Long-term trade receivable 7 26,979 -
Exploration and evaluation assets 8 5,722 5,720
Property, plant and equipment 9 96,948 102,044
    129,649 107,764
Total Assets    211,967 212,244
       
EQUITY AND LIABILITIES      
Current Liabilities      
Trade and other payables 10 49,758 45,496
Bank loan 11 6,603 5,842
Taxation payable   3,430 6,322
    59,791 57,660
Non-Current Liabilities      
Deferred income taxes 6 15,432 20,399
Deferred additional profits tax 6 14,676 8,250
    30,108 28,649
Total Liabilities   89,899 86,309
       
Equity      
Capital stock   84,983 84,983
Contributed surplus   6,753 6,753
Accumulated other comprehensive income   14 89
Accumulated income   30,318 34,110
    122,068 125,935
Total Equity and Liabilities    211,967 212,244

See accompanying notes to the condensed consolidated interim financial statements.

Future operations (Note 1)
Contractual obligations and committed capital investment (Note 13)
Contingencies (Note 14)

The consolidated condensed interim financial statements were approved by the Board of Directors on 26th August 2013. 


Condensed Consolidated Interim Statement of Cash Flows (Unaudited)

ORCA EXPLORATION GROUP INC.

           
    THREE MONTHS ENDED SIX MONTHS ENDED
US$'000s NOTE 30 Jun 2013 30 Jun 2012 30 Jun 2013 30 Jun 2012
CASH FLOWS (USED IN)/FROM OPERATING ACTIVITIES          
Profit/(Loss) after taxation   (6,566) 5,167 (3,792) 11,559
Adjustment for:          
  Depletion and depreciation 9 2,693 2,136 5,502 4,156
  Provision for doubtful debt 7 7,100 - 7,100 -
  Discount on long-term receivable 5, 7 7,900 - 7,900 -
  Stock-based compensation 12 (44) 615 (315) 621
  Deferred income taxes 6 (4,381) 1,350 (4,967) 2,072
  Deferred additional profits tax 6 3,390 717 6,425 1,389
  Interest received   - (1) - (2)
  Unrealised loss on foreign exchange   454 (2) 1390 76
Funds flow from operating activities   10,546 9,982 19,243 19,871
Decrease/(Increase) in trade and other receivables   29,597 (9,373) 8,669 (11,491)
Decrease/(Increase) in taxation receivable   86 (3,077) 407 (6,905)
(Increase)/Decrease in prepayments   (221) (500) (183) (540)
(Decrease)/Increase in trade and other payables   (3,138) 6,503 4,254 7,036
(Decrease)/Increase in taxation payable   (1,623) 2,154 (2,892) 4,371
(Increase) in long-term receivable   (26,979) - (26,979) -
Net cash flows from operating activities   8,268 5,689 2,519 12,342
CASH FLOWS USED IN INVESTING ACTIVITIES          
Exploration and evaluation expenditures   - (2,978) (2) (4,557)
Property, plant and equipment expenditures   (138) (15,486) (406) (32,656)
Interest received   - 1 - 2
Increase in trade and other payables   - 2,332 - 10,405
Net cash used in investing activities   (138) (16,131) (408) (26,806)
CASH FLOWS (USED IN)/FROM FINANCING ACTIVITIES          
Bank loan proceeds   - - 4,000 -
Bank loan repayments 11 (2,455) - (3,239) -
Net cash flow from/ (used in) financing activities   (2,455) - 761 -
Increase/(Decrease) in cash and cash equivalents   5,675 (10,442) 2872 (14,464)
Cash and cash equivalents at the beginning of the period   13,421 30,634 16,047 34,680
Effect of change in foreign exchange on cash in hand   (344) 2 (167) (22)
Cash and cash equivalents at the end of the period   18,752 20,194 18,752 20,194

See accompanying notes to the condensed consolidated interim financial statements.


Condensed Consolidated Interim Statement of Changes in Shareholders' Equity (Unaudited)

ORCA EXPLORATION GROUP INC.

           
US$'000 Capital stock Contributed
surplus
Cumulative
translation
adjustment
Accumulated 
income
Total
Note 12        
           
Balance as at 1 January 2013 84,983 6,753 89 34,110 125,935
Foreign currency translation adjustment on foreign operations - - (75) - (75)
Loss after tax for the period - - - (3,792) (3,792)
Balance as at 30 June 2013 84,983 6,753 14 30,318 122,068
           
US$'000 Capital stock Contributed
surplus
Cumulative
translation
adjustment
Accumulated
income
Total
Balance as at 1 January 2012 84,610 6,268 - 15,781 106,659
Foreign currency translation adjustment on foreign operations - - - - -
Stock based compensation - 720 - - 720
Profit after tax for the period - - - 11,559 11,559
Balance as at 30 June 2012 84,610 6,988 - 27,340 118,938

See accompanying notes to the condensed consolidated interim financial statements.


Orca Exploration Group Inc.

Orca Exploration Group Inc. 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 TSXV under the trading symbols ORC.B and ORC.A. The complete condensed interim consolidated financial statements and notes, and Management Discussion & Analysis may be found on the Company's website www.orcaexploration.com or on www.sedar.com.

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 Statements

This press release contains forward-looking statements. More particularly, this press release contains statements concerning, but not limited to, the Company's beliefs regarding its ability to collect the full TANESCO receivable; status of negotiations with the GNT to conclude an agreed form of amendment to the Songo Songo PSA; incremental gas sales volumes; status of negotiations with the TPDC regarding a long-term sales agreement for incremental gas volumes; status of execution of a full field development plan for Songo Songo; and the Company's strategic plans. 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. Many factors could cause Orca's actual results to differ materially from those expressed or implied in any forward-looking statements made by Orca.

These forward-looking statements involve substantial known and unknown risks and uncertainties, certain of which are beyond Orca's control, including, but not limited to, the impact of general economic conditions in the areas in which Orca operates; civil unrest; industry conditions; changes in laws and regulations including the adoption of new environmental laws and regulations and changes in how they are interpreted and enforced; increased competition; the lack of availability of qualified personnel or management; fluctuations in commodity prices; foreign exchange 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; effect of changes to the PSA on the Company; changes in laws; imprecision in reserve estimates; the production and growth potential of the Company's assets; obtaining required approvals of regulatory authorities; risks associated with negotiating with foreign governments; ability to access sufficient capital; failure to collect the full TANESCO receivable; failure to successfully negotiate agreements; and risk that the Company will not be able to fulfill its obligations. In addition there are risks and uncertainties associated with oil and gas operations, therefore Orca's actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-looking estimates and, accordingly, no assurances can be given that any of the events anticipated by the forward-looking estimates will transpire or occur, or if any of them do so, what benefits that Orca will derive therefrom.

Such forward-looking statements are based on certain assumptions made by Orca in light of its experience and perception of historical trends, current conditions and expected future developments, as well as other factors Orca believes are appropriate in the circumstances, including, but are not limited to, the ability of Orca to add production at a consistent rate; infrastructure capacity; commodity prices will not deteriorate significantly; the ability of Orca to obtain equipment 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 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; 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 press release are made as of the date hereof and Orca 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.

 

SOURCE Orca Exploration Group Inc.



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