Petroleum Africa
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Monday, November 2, 2015
Orca Exploration has secured funding for its Songo Songo Main Field development program. The company announced that it has entered into a loan agreement with the IFC for a $60 million loan for its subsidiary in Tanzania, Pan African Energy Tanzania Ltd. (PAET).
Proceeds of the loan will be used to fund part of an estimated $120 million first phase of its Songo Songo Main Field development program currently underway in Tanzania. The company launched the development program in September using Paragon M826 drilling rig. The offshore program is designed to put safe existing suspended and operating production wells; 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 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 program 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 Mmscf/d per well.
The offshore program is intended to restore and expand field productive capacity from around 83 Mmcf/d prior to the program to around 190 Mmscf/d on completion of the program. When completed, the field is expected to be capable of both filling the existing Songas infrastructure to capacity of approx. 102 Mmscf/d, as well as providing additional gas volumes to the newly commissioned National Natural Gas Infrastructure Project 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 $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.
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