Orca Exploration announces record 2012 results amid a year of challenges
TSX-V: ORC.A, ORC.B
TORTOLA, British Virgin Islands, April 29, 2013 /CNW/ - Orca Exploration Group Inc. ("Orca" or "the Company") announces its results for the year ended 31 December 2012.
Orca Exploration operated its Tanzania Songo Songo gas field at maximum
plant and pipeline capacity resulting in record operating and financial
Profit after tax for the year was a record US$18.3 million, or US$0.52
per share diluted, up 130% over 2011.
An 18% increase in gas sales volumes plus a 10% increase in the average
gas price, together with higher cost recoveries as a result of capital
spending combined to double funds flow from operations over 2011 to a
record US$45.8 million, or US$1.30 per share diluted.
Capital spending in 2012 was US$54.7 million (2011: US$18.1 million) of
which US$38 million was expended on SS-11 drilling and completion,
US$7.9 million on preparation for SS-12 and Songo Songo West drilling,
and US$7.5 million on the unsuccessful La Tosca exploration well in
Given TANESCO and Songas non-payments, record funds flow did not
translate to cash -- balances at the end of 2012 were US$16.0 million,
down 54% from 2011, net of US$54.7 million in capital spending during
the year and including US$6.0 million in bank borrowings. Accordingly,
the Company has incorporated a going concern note into its 2012
Consolidated Financial Statements.
Working capital was US$46.8 million, which included a US$33.3 million
receivable from TANESCO -- at the end of the year the Company had drawn
US$6.0 million of a US$10.0 million senior debt facility which was set
up in Q3 to assist in financing TANESCO receivables.
Average gas prices up 10% in 2012 to US$4.31/Mcf (2011: US$3.92/Mcf),
industrial gas prices were down 7.5% in 2012 to US$9.31/Mcf from
changes in the sales mix, and average power sector gas prices increased
15% over 2011 to US$3.18/mcf from US$2.77/mcf, pursuant to the PGSA and
Current TANESCO receivable is US$49.3 million, or about US$0.90 per
share on a net basis - Government of Tanzania has raised US$600 million
in debt and US$100 million in World Bank budget support finance and
assured the Company that arrears will be paid from these proceeds.
Songo Songo PSA and GNT issues remain unresolved, however the Company
has continued to work in cooperation with the Government and has tabled
a PSA amendment for the Government's consideration.
Establishing commercial terms for future incremental gas sales is a key
condition to the Company's commitment to Songo Songo development - the
Company has recently entered into discussions with TPDC concerning a
gas sales agreement.
Government of Tanzania succeeded in arranging a US$1.2 billion project
financing with the China Exim Bank to deliver a major natural gas
infrastructure expansion project which was inaugurated in November 2012
and expected to be completed by the end of 2014.
On 1st November 2012, the Government of Tanzania issued a draft natural
gas policy which contemplates a restructuring of TPDC, strategic
participation throughout the upstream, midstream and downstream
sectors, ownership and control over gas infrastructure and setting
domestic natural gas prices - at the request of the Government, the
Company submitted its views on the draft policy and a second draft
policy is expected in the near future.
The La Tosca well in the Longastrino exploration block in the Po Valley,
Northern Italy was drilled in August and has been plugged and abandoned
having encountered gas shows -- Orca has earned a 70% working interest
and, subject to government approval, operatorship of the block. The
Company intends to review the technical and drilling data to determine
whether or not to continue exploration on the block. The offshore Italy
Elsa appraisal well is now expected to be drilled in 2014.
With the completion of SS-11, brought onstream in October 2012, the
Company has substantially upgraded the quality of its wellbore
portfolio. Subsequent to bringing SS-11 onstream, the SS-9 and SS-3
wells were taken off production leaving the field producing at maximum
capacity and having no redundancy.
- Songo Songo gas reserves remain solid with a 9% decrease in Songo Songo's Total Proved Additional Gas reserves to the end of the license period, with no change on a life of field basis; total Additional Gas production of 20.6 Bcf during the year; an 11% decrease in the Proved plus Probable Additional Gas reserves on a Gross Company life of license basis from 548.5 Bcf to 489.3 Bcf. NPV10% 2P was estimated at US$386 million.
Financial and Operating Highlights
|YEAR ENDED/ AS AT 31 DECEMBER||2012||2011||Change|
|Financial (US$'000 except where otherwise stated)|
|Profit before taxation||35,454||15,320||131%|
|Operating netback (US$/mcf)||2.82||2.05||38%|
|Cash and cash equivalents||16,047||34,680||(54%)|
|Earnings per share - basic (US$)||0.53||0.23||130%|
|Earnings per share - diluted (US$)||0.52||0.22||136%|
|Funds flow from operating activities||45,949||22,658||103%|
|Funds per share from operating activities - basic (US$)||1.33||0.65||105%|
|Funds per share from operating activities - diluted (US$)||1.30||0.63||106%|
|Net cash flows from operating activities||30,568||4,577||568%|
|Net cash flows per share from operating activities - basic (US$)||0.88||0.13||577%|
|Net cash flows per share from operating activities - diluted (US$)||0.86||0.13||562%|
|Outstanding Shares ('000)|
|Class A shares||1,751||1,751||0%|
|Class B shares||32,892||32,746||0%|
|Additional Gas sold (MMcf) - industrial||3,813||2,742||39%|
|Additional Gas sold (MMcf) - power||16,832||14,722||14%|
|Additional Gas sold (MMcfd) - industrial||10.4||7.5||39%|
|Additional Gas sold (MMcfd) - power||46.0||40.3||14%|
|Additional Gas sold (MMcfd)||56.4||47.8||18%|
|Average price per mcf (US$) - industrial||9.30||10.05||(7%)|
|Average price per mcf (US$) - power||3.18||2.77||15%|
|Additional Gas Gross Recoverable Reserves to end of licence (Bcf)(2)|
|Proved plus probable||489||548||(11%)|
|Net Present Value, discounted at 10% (US$ million)(2)|
|Proved plus probable||386||351||10%|
- Working capital as at 31 December 2012 includes a TANESCO receivable of US$33.3 million (2011: US$24.2 million) and a net Songas receivable of US$5.9 million (2011: US$0.7 million)
- Based on report prepared by Orca Exploration's independent reserve evaluator McDaniel & Associates Consultants Ltd. dated effective December 31, 2012, which was prepared in accordance with definitions, standards and procedures contained in the Canadian Oil and Gas Evaluation Handbook. It should not be assumed that the undiscounted or discounted net present value of future net revenue attributable to the Company's reserves estimated by McDaniel represent the fair market value of those reserves.
Consolidated Statement of Comprehensive Income
ORCA EXPLORATION GROUP INC.
|YEARS ENDED 31 DECEMBER|
|US$'000 except per share amounts||2012||2011|
|Cost of sales|
|Production and distribution expenses||(5,953)||(6,088)|
|General and administrative expenses||(17,989)||(15,440)|
|Exploration asset impairment||(8,284)||-|
|Net finance costs||(611)||(953)|
|Profit before taxation||35,454||15,320|
|Profit after taxation||18,329||7,986|
|Foreign currency translation gain from foreign operations||89||-|
|Total comprehensive income for the year||18,418||7,986|
|Earnings per share|
Consolidated Statement of Financial Position
ORCA EXPLORATION GROUP INC.
|Cash and cash equivalents||16,047||34,680|
|Trade and other receivables||73,495||40,348|
|Exploration and evaluation assets||5,720||2,921|
|Property, plant and equipment||102,044||67,713|
|EQUITY AND LIABILITIES|
|Trade and other payables||45,496||22,801|
|Deferred income taxes||20,399||15,194|
|Deferred additional profits tax||8,250||4,787|
|Accumulated other comprehensive income||89||-|
|Total Equity and Liabilities||212,244||151,844|
Consolidated Statement of Cash Flows
ORCA EXPLORATION GROUP INC
|YEARS ENDED 31 DECEMBER|
|CASH FLOWS FROM OPERATING ACTIVITIES|
|Profit after taxation||18,329||7,986|
|Depletion and depreciation||9,281||8,389|
|Impairment of assets||8,284||-|
|Gain on disposal of vehicle||-||(5)|
|Deferred income taxes||5,205||2,385|
|Deferred additional profits tax||3,463||2,527|
|Unrealised loss on foreign exchange||258||530|
|Funds flow from operating activities||45,949||22,658|
|Increase in trade and other receivables||(33,133)||(27,171)|
|Increase in taxation receivable||(8,812)||(1,871)|
|Decrease in prepayments||56||107|
|Increase in trade and other payables||22,589||10,451|
|Increase in taxation payable||3,919||403|
|Net cash flows from operating activities||30,568||4,577|
|CASH FLOWS USED IN INVESTING ACTIVITIES|
|Exploration and evaluation expenditures||(11,083)||(1,979)|
|Property, plant and equipment expenditures||(43,612)||(16,156)|
|Proceeds from sale of vehicle||-||5|
|(Decrease)/increase in trade and other payables||(716)||3,541|
|Net cash used in investing activities||(55,388)||(14,584)|
|CASH FLOWS (USED IN)/FROM FINANCING ACTIVITIES|
|Normal course issuer bid||(12)||(681)|
|Proceeds from exercise of options||150|
|Bank loan proceeds||5,842||-|
|Net cash flow from/ (used in) financing activities||5,980||(681)|
|Decrease in cash and cash equivalents||(18,840)||(10,688)|
|Cash and cash equivalents at the beginning of the year||34,680||45,519|
|Effect of change in foreign exchange||207||(151)|
|Cash and cash equivalents at the end of the year||16,047||34,680|
Consolidated Statement of Changes in Shareholders' Equity
ORCA EXPLORATION GROUP INC.
|Balance as at 1 January 2012||84,610||6,268||-||15,781||106,659|
|Stock based compensation||-||720||-||-||720|
|Normal course issuer bid||(10)||(2)||-||-||(12)|
|Foreign currency translation of foreign operations||-||-||89||-||89|
|Total comprehensive income for the period||-||-||-||18,329||18,329|
|Balance as at 31 December 2012||84,983||6,753||89||34,110||125,935|
|Balance as at 1 January 2011||85,100||5,288||-||7,795||98,183|
|Stock based compensation||-||1,171||-||-||1,171|
|Normal course issuer bid||(490)||(191)||-||-||(681)|
|Total comprehensive income for the period||-||-||-||7,986||7,986|
|Balance as at 31 December 2011||84,610||6,268||-||15,781||106,659|
Orca Exploration Group Inc.
Orca Exploration Group Inc. is an international public company engaged in natural gas exploration, development and supply in Tanzania through the 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 Audited Consolidated Financial Statements and Notes, Management Discussion & Analysis, and the NI-51-101 Standards of Disclosure for Oil and Gas Activities filing 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, repayment of the TANESCO receivable; expected timing of completion of a major natural infrastructure project; terms of the Government of Tanzania's draft natural gas policy and anticipated timing of second draft policy; the Company's plans to review technical and drilling data on the La Tosca well to determine whether or not to continue exploration on the block; expected timing of drilling of an offshore Italy Elsa appraisal well; industry conditions; industry conditions; and the Company's strategic plans. In addition, statements relating to "reserves" or "resources" are by their nature forward-looking statements, as they involve the implied assessment, based on certain estimates and assumptions that the resources and reserves described can be profitably produced in the future. The recovery and reserve estimates of Orca's reserves provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered. 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. 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; failure to receive payments from TANESCO; 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; 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.