Petroleum Africa
Find us on: 
Monday, January 27, 2020
Jn a recent update, Orca Exploration announced the authorization of a substantial issuer bid, the outcome of its strategic review process, and its focused strategy to grow an integrated gas business in Africa, chiefly at its Songo Songo license in Tanzania.
The company says 2019 was a successful year for at its operation in Tanzania. The highlights include:
An increase in 2019 sales volumes to 63.1 million standard cubic feet per day (“MMscfd”) (2018: 39.9 MMscfd). In Q4 2019, sales volumes averaged 70.8 MMscfd (Q4 2018: 44.8 MMscfd). The weighted average sales price for 2019 gas deliveries was US$4.38 per thousand cubic feet (“mcf”) (2018: US$5.17/mcf). In Q4 2019, the weighted average sales price was US$4.24/mcf (Q4 2018: US$4.31/mcf).
Orca also signed a gas sales agreement with TPDC (Tanzania Petroleum Development Corporation) for up to 20 MMscfd (and subsequently increased to 30 MMscfd, with the increased volumes being supplied on a reasonable endeavours basis) to be processed and transported to Dar es Salaam through the National Natural Gas Infrastructure (“NNGI”). The NNGI processing plant on Songo Songo Island has a gas processing capacity of 140 MMscfd.
Orca also saw the installation, testing and commissioning of a refrigeration unit on the Songas gas processing facility that it operates. The addition of the refrigeration unit has increased the volumes that can be transported from the field to Dar es Salaam through the Songas facilities (which are operated by Orca on behalf of Songas) to 97 MMscfd.
Orca also outlined the outcome of its Strategic Review Process. “With the assistance of its financial advisor, RBC Capital Markets, the special committee of the board of directors of the Company completed a thorough review of the options available to the Company to maximize shareholder value. As part of the strategic review, the Special Committee considered and evaluated a substantial issuer bid, a secondary listing of the Company’s shares on another exchange, a reorganization of the Company’s share capital, a secondary offering of the Company’s outstanding shares, and the acquisition of the Company or other arrangement, merger transaction or business combination with another company resulting in asset and/or jurisdiction diversification and a larger, more liquid market, for the equity of the combined company.
Based on the alternatives available to the Company, the Special Committee has recommended, and the Board of Directors has concluded, that it is in the best interests of the Company and its shareholders to continue operating as an independent company with a view to enhancing value to its shareholders through a balanced approach, focused on:
Return of Capital: The return of retained cash to shareholders in the form of share repurchases and/or dividends.
Value Maximization of the Songo Songo Production Licence: The continued value maximization and monetization of the Company’s rights to develop the Songo Songo natural gas field in Tanzania; and
Sustainable Growth: Strategic reinvestment utilizing the Company’s core competency to develop a sustainable, integrated gas business in Africa with accretive returns.
In conjunction with the announcement of this strategy, the Company intends to return a portion of its excess cash to shareholders through a substantial issuer bid. The Company also plans to introduce a dividend policy in the first half of 2020 providing for regular dividends determined on an annual basis, and will assess from time-to-time incremental returns of capital to shareholders relative to the merits of available investment opportunities.”
Nigel Friend, Chief Executive Officer, commented: “We are pleased to have concluded the strategic review process. On the back of our strong performance in 2019, it is now the right time to return a portion of our retained cash back to shareholders through a substantial issuer bid. The prudent management of capital and regular distributions to our shareholders will continue to be a core part of our strategy.
We believe that the decision to focus on generating material returns for shareholders via organic growth and strategic reinvestment of retained capital into other African gas opportunities, will enable the Board of Directors and management to deliver accretive value to shareholders going forward.
“Given the strength of Orca’s operations and the Company’s balance sheet, we are well placed to deliver on the agreed mandate outlined by the strategic review process.”
" alt="First LNG Realized at the Greater Tortue Ahmeyim Project">
" alt="United Energy Acquires Western Desert Producer APEX">
" alt="Baker Hughes Announces Major Gas Technology Orders for Venture Global LNG">
" alt="ReconAfrica: Naingopo Results Demonstrate a Working Petroleum System">
" alt="Tullow Highlights 2025 Operational Plans in Ghana">
" alt="TotalEnergies to Supply 1.5 TWh to STMicroelectronics in France Over 15 years">
" alt="Rockhopper Reaches Final Settlement with United on Egypt’s Abu Sennan Concession">
" alt="Oil & Gas Crucial for African Growth: AEC Calls for Industry Support to Defend African Market">
