TSX-V: ORC.A, ORC.B

TORTOLA, British Virgin Islands, Oct. 29, 2015 /CNW/ - Orca Exploration Group Inc. ("Orca" or the "Company") announces that it has entered into a loan agreement with International Finance Corporation ("IFC"), a member of the World Bank Group, for a US$60 million investment (the "Loan") in the Company's operating subsidiary, PanAfrican Energy Tanzania Limited ("PAET").

Proceeds of the Loan will be used to fund part of an estimated US$120 million first phase of a Songo Songo Main Field development programme (the "Off-Shore Programme") currently being undertaken using the Paragon M826 drilling rig (commenced in September 2015). The Off-Shore Programme is designed to (i) put safe existing suspended and operating production wells; (ii) restore and increase the current productive capacity of the Songo Songo Main Field to ensure the continued delivery of Protected and Additional gas into the existing Songas infrastructure; and (iii) provide additional operational redundancy and deliverability for future additional gas sales, by way of the workover and recompletion, abandonment or sidetrack drilling of three existing offshore wells, and/or the drilling of additional production gas wells at locations to be determined in the region of the existing offshore wells depending  on the outcome of the workovers. Since programme commencement, previously suspended production wells SS-5 and SS-9 have been successfully worked over and recompleted, and have been restored to full productive capacity estimated to be approximately 35 MMscfd per well.

The Off-Shore Programme is intended to restore and expand field productive capacity from approximately 83 million standard cubic feet per day ("MMscfd") prior to the programme to approximately 190 MMscfd on completion of the programme. When completed, the field is expected to be capable of both filling the existing Songas infrastructure to capacity of approximately 102 MMscfd, as well as providing additional gas volumes to the newly commissioned National Natural Gas Infrastructure Project ("NNGIP") as and when contracted.

The term of the Loan is 10-years, with no repayment of principal for the first seven years, followed by a three-year amortization period.  The Loan is an unsecured subordinated obligation of PAET and is guaranteed by Orca to a maximum of US$30 million.  The guarantee may only be called upon by IFC at maturity in 2025 and, subject to (among others) IFC approval, Orca may issue shares in fulfillment of all or part of the guarantee obligation in 2025, subject to receipt of all required regulatory approvals.  

Base interest on the Loan is payable quarterly at 10% per annum on a 'pay-if-you-can-basis' using a formula to calculate the net cash available for such payments as at any given interest payment date.  In addition, an annual variable participatory interest equating to 7% of the cash flow of PAET net of capital expenditures is payable in respect of any given year, commencing with 2016.  Such participatory interest survives the repayment and/or maturity of the Loan until 15 October 2026.  It is also detachable from the Loan and accordingly can be transferred independently.  Dividends and distributions from PAET to Orca are restricted during the term of the Off-Shore Programme and at any time that any amounts of unpaid interest, principal or participating interest are outstanding.

The Loan is available subject to the fulfilment of certain conditions, which include attending to the registration of the Loan with the Bank of Tanzania and W. David Lyons entering into arrangements, satisfactory to IFC, whereby he will commit (directly or indirectly) not to reduce his beneficial ownership in Orca in a way that would result in him having less than 51% of the voting rights therein.

"The conclusion of the IFC financing is a significant achievement for Orca and an important endorsement of the Company's continuing commitment to Tanzania," commented W. David Lyons, Orca Chairman and Chief Executive Officer. "It allows us to raise finance and manage risk in the face of a challenging business environment, and to undertake urgently needed development of the Songo Songo field. It further safeguards Songo Songo's future as an important part of Tanzania's energy security.  The World Bank was instrumental in bringing the Songo Songo gas-to-electricity project to reality some 20 years ago and Orca is pleased to continue this long-term relationship, now directly with IFC, in support of the sustainable development of Tanzania's energy resources."

"The Songo Songo field is Tanzania's most important source of proven natural gas production, and is the largest supplier of energy to the Dar es Salaam region" said Lance Crist, IFC Global Head of Natural Resources. "Through this investment, IFC is working to help to alleviate electricity shortages in Tanzania, which are an impediment to the country's continued economic growth and development."

About IFC

IFC, a member of the World Bank Group, is the largest global development institution focused on the private sector in emerging markets. Working with more than 2,000 businesses worldwide, IFC uses its capital, expertise, and influence to create opportunity where it's needed most. In FY15, IFC's long-term investments in developing countries rose to nearly $18 billion, helping the private sector play an essential role in the global effort to end extreme poverty and boost shared prosperity. For more information, visit www.ifc.org.

About Orca Exploration Group Inc.

Orca 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 TSX Venture Exchange under the trading symbols ORC.A and ORC.B.

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 Information

This news release contains forward-looking information. More particularly, this news release contains statements and information concerning, but not limited to, the terms of the Loan; the terms and design of the Off-Shore Programme, including the estimated cost of the first phase of the Off-Shore Programme, the effect of the Off-Shore Programme on restoring and expanding field productive capacity and the anticipated amount of the increase in field productive capacity; Orca's expectations that when the Off-Shore Programme is completed that it will be capable of both filling the existing Songas infrastructure to capacity and providing additional gas volumes available to the newly commissioned NNGIP as and when contracted; the estimated full productive capacity of production wells SS-5 and SS-9; the conditions precedent to availability of the Loan; Orca's ability to issue shares in 2025 in fulfillment of all or part of its guarantee obligations under the Loan; and other matters. Although management believes that the expectations reflected in the forward-looking information are reasonable, it cannot guarantee future agreement, levels of activity, performance or achievements since such expectations are inherently subject to significant uncertainties and contingencies. As a consequence, actual results may differ materially from those anticipated in the forward-looking information.

Forward-looking information involves substantial known and unknown risks and uncertainties, certain of which are beyond Orca's control, and many factors could cause the actual results to differ materially from those expressed or implied in the forward-looking information presented by Orca, including, but not limited to: the failure to satisfy the conditions precedent to availability of the Loan; risk that the Paragon M826 drilling rig fails to fulfill the terms of the drilling contract; failure to restore and expand field productive capacity under the Off-Shore Programme; risk that Orca is unable to access the additional funding required to proceed with the entire Off-Shore Programme; failure to achieve the anticipated level of field productive capacity under the Off-Shore Programme; risk that the Off-Shore Programme, when completed, is not capable of both filling the existing Songas infrastructure to capacity and providing additional gas volumes available to the newly commissioned NNGIP as and when contracted; risk that the Off-Shore Programme is not completed as planned and the actual cost to undertake the Off-Shore Programme exceeds the Company's estimates; risk that the contingencies related to the development work for the full field development plan for Songo Songo are not satisfied; failure to receive all required regulatory approvals for Orca to issue shares in 2025 in fulfillment of all or part of its guarantee obligations under the Loan; the impact of general economic conditions in the areas in which Orca operates; changes in laws and regulations including changes in how they are interpreted and enforced; the lack of availability of qualified personnel or management; fluctuations in commodity prices, foreign exchange and/or interest rates; stock market volatility; obtaining certain required contractual approvals and approvals of certain regulatory authorities; risks associated with negotiating with foreign governments; risk that the Company will be required to pay additional taxes and penalties; delays in drilling plans; failure to obtain expected results from drilling; inability to access sufficient capital; and risk that the Company will not be able to fulfill its obligations, including under the Loan. Actual results, performance or achievements could differ materially from those expressed in, or implied by, the forward-looking information and, accordingly, no assurances can be given that any of the events anticipated by the forward-looking information will transpire or occur, or if any of them do so, what benefits Orca will derive therefrom. Readers are cautioned that the foregoing list of factors is not exhaustive.

Such forward-looking information is based on certain assumptions made by Orca in light of its experience and current knowledge of the circumstances, as well as other factors Orca believes are appropriate in the circumstances, including, but not limited to: that the conditions precedent to availability of the Loan will be satisfied; the availability of the proceeds of the Loan to fund the Off-Shore Programme; that the Company will have all necessary regulatory and contractual approvals related to certain aspects of the Off-Shore Programme and the Loan; that the Company will have sufficient cash flow, debt or equity sources or other financial resources required to fund its operations; that the Company will have access to the additional funding required to proceed with the entire Off-Shore Programme; that the Company can expand Songo Songo development beyond the existing Songas infrastructure and supply gas to the NNGIP; the estimated cost to undertake the Off-Shore Programme; infrastructure capacity; the ability of Orca to obtain equipment and services in a timely manner to carry out exploration, development and exploitation activities; future capital expenditures; availability of skilled labour; conditions in general economic and financial markets; commodity prices will not further deteriorate significantly; current or, where applicable, proposed industry conditions, laws and regulations will continue in effect or as anticipated; and other matters.

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

SOURCE Orca Exploration Group Inc.