TSX-V: ORC.A, ORC.B
TORTOLA, British Virgin
Islands, Nov. 27, 2013 /CNW/ -
Orca Exploration Group Inc. ("Orca" or "the Company") announces its
results for the third quarter ended 30th September 2013.
Highlights
- US$16.4 million was received from
TANESCO during Q3 and a subsequent payment of US$7.2 million.
- At 30 September 2013, TANESCO
owed the Company US$53.0 million
including arrears of US$44.5 million
(30 June 2013: US$46.3 million, including arrears of
US$39.7 million). Currently TANESCO
owes US$52.8 million.
- World Bank is working towards payment guarantees on future gas
deliveries whilst TANESCO makes an application for a 68% tariff
increase and the Government deals with the arrears. If successful,
the Company anticipates the initiatives will arrest the payments
problem and establish a foundation to moving forward.
- With no real progress on key contractual issues, the Company
initiated contractual mechanisms on the US$34 million Cost Pool dispute and the alleged
US$21 million Songas tariff claim to
put issues on a timeline to resolution.
- Tanzania made real progress on
the National Natural Gas Infrastructure Project with approximately
120 km of pipe laid to date and the Government maintaining its
target onstream date of January
2015.
- Plans continued for Songo Songo
with the Company submitting a field development plan and engaging a
multi-lateral lending agency to evaluate funding the approximate
US$160 million programme whilst gas
contract terms are agreed and issues are settled.
- Negotiations on a 120 MMcfd gas sales agreement with the
Tanzania Petroleum Development
Corporation (TPDC) in its capacity as gas aggregator continued
during the quarter - pricing is the principal term yet to be
agreed.
- Production continued at full capacity averaging 98 MMcfd for
the quarter with Additional Gas sales averaging 65.7 MMcfd up 14%
over the prior period (Q3 2012: 57.5 MMcfd) and up 12% over Q2 2013
(58.4 MMcfd), the increase in Additional Gas sales a result of a
reduction in Protected Gas off take during the quarter.
- Industrial sales volume increased by 2% to 11.9 MMcfd from 11.7
MMcfd in Q2 2013. Power sector sales volumes during Q3 averaged
53.9 MMcfd up 15% over Q2 at 46.7 MMcfd.
- Stronger gas sales prices and volumes, offset slightly by an
11% increase in operating and G&A costs, resulted in Q3 funds
from operations before working capital changes of US$11.9 million (US$0.34 per share diluted), up 12% from Q2 2013
(US$10.5 million or US$0.30 per share diluted).
- Average Industrial gas price for the quarter was US$8.43/mcf down 2% from Q2 2013 (US$8.60/mcf) and Power sector gas prices averaged
US$4.10/mcf for the quarter up 13%
over the Q2 average price of US$3.63/mcf.
- Q3 posted income of US$1.9
million or US$0.05 per share
diluted, against a US$6.8 million
loss (US$0.19 per share) in Q2. The
Company made an additional provision of US$2.9 million to reflect estimated cost of
additional delays in payment of TANESCO arrears arising from the
delay in World Bank Tranche II Government funding and provided a
further US$1.2 million for doubtful
accounts.
- Working capital increased by 40% to US$31.6 million as at 30
September 2013 (US$22.5
million as at 30 June 2013) as
a consequence of increased funds from operations and only
US$0.7 million in capital spending
during the quarter. Cash on hand at 30
September 2013 was US$30.3
million up 62% over Q2. Current cash balances are
approximately US$34 million.
- Subsequent to the end of Q3, TRA issued its formal audit report
for the 2008-2010 taxation years. The report contemplates
additional taxes and penalties totaling US$19.7 million that may become the subject of a
revised tax assessment in the future. As at the date of this
report, the Company has not received an assessment. The Company is
currently reviewing the report and, as of the date of this report,
believes the findings to be substantially without merit and will
take appropriate action through the appeal process if, and when, an
assessment is received.
- The Company is pleased to announce the appointment of Patrick
Rutabanzibwa as Country Chairman, PanAfrican Energy Tanzania
Limited. Retiring after a 30-year career in Government, Patrick was
most recently Permanent Secretary of the Ministry of Lands, Housing
and Human Settlements. Notably, Patrick spent over eight years in
the Ministry of Energy and Minerals rising to the post of Permanent
Secretary, and was the key Government official responsible for
negotiating and concluding the Songo Songo Project in 2001.
Financial and Operating Highlights
| |
THREE MONTHS
ENDED /AS AT |
| US$'000 except where otherwise
stated |
30 SEPT
2013 |
|
30 SEPT
2012 |
|
% Change |
|
30 JUN
2013 |
|
% Change |
| Revenue |
14,659 |
|
22,425 |
|
(35) |
|
11,996 |
|
22 |
| Profit (loss) before taxation |
3,876 |
|
6,310 |
|
(39) |
|
(8,509) |
|
146 |
| Operating netback (US$/mcf)
(1) |
2.26 |
|
3.14 |
|
(28) |
|
2.10 |
|
7 |
| Cash and cash equivalents |
30,290 |
|
23,289 |
|
30 |
|
18,752 |
|
62 |
| Working capital
(2) |
31,585 |
|
37,730 |
|
(16) |
|
22,527 |
|
40 |
| Shareholders' equity |
124,170 |
|
120,204 |
|
3 |
|
122,068 |
|
2 |
| Total comprehensive income |
1,928 |
|
1,266 |
|
52 |
|
(6,817) |
|
128 |
| Earnings per share - basic
(US$) |
0.05 |
|
0.04 |
|
50 |
|
(0.19) |
|
129 |
| Earnings per share - diluted
(US$) |
0.05 |
|
0.04 |
|
50 |
|
(0.19) |
|
129 |
| Funds flow from operating
activities |
11,851 |
|
14,379 |
|
(18) |
|
10,546 |
|
12 |
| Funds per share from operating
activities - basic (US$) (1) |
0.34 |
|
0.42 |
|
(18) |
|
0.30 |
|
15 |
| Funds per share from operating
activities - diluted (US$) (1) |
0.34 |
|
0.41 |
|
(17) |
|
0.30 |
|
15 |
| Net cash flows from operating
activities |
14,481 |
|
9,088 |
|
59 |
|
8,101 |
|
79 |
| Net cash flows per share from
operating activities - basic (US$) (1) |
0.42 |
|
0.26 |
|
59 |
|
0.23 |
|
80 |
| Net cash flows per share from
operating activities - diluted (US$) (1) |
0.41 |
|
0.26 |
|
60 |
|
0.23 |
|
81 |
| Outstanding
Shares ('000) |
| Class A shares |
1,751 |
|
1,751 |
|
- |
|
1,751 |
|
- |
| Class B shares |
33,072 |
|
32,743 |
|
1 |
|
32,892 |
|
1 |
| Options |
1,742 |
|
2,172 |
|
(22) |
|
1,922 |
|
(9) |
| Operating |
| Additional Gas sold (MMcf)
- Industrial |
1,092 |
|
1,022 |
|
7 |
|
1,067 |
|
2 |
| Additional Gas sold (MMcf)
- Power |
4,953 |
|
4,270 |
|
16 |
|
4,250 |
|
17 |
| Additional Gas sold (MMcfd)
- Industrial |
11.9 |
|
11.1 |
|
7 |
|
11.7 |
|
2 |
| Additional Gas sold (MMcfd)
- Power |
53.8 |
|
46.4 |
|
16 |
|
46.7 |
|
15 |
| Additional Gas sold
(MMcfd) |
65.7 |
|
57.5 |
|
14 |
|
58.4 |
|
12 |
| Average price per mcf (US$)
- Industrial |
8.43 |
|
9.21 |
|
(8) |
|
8.60 |
|
(2) |
| Average price per mcf (US$)
- Power |
4.10 |
|
3.55 |
|
15 |
|
3.63 |
|
13 |
| 1. |
Non-GAAP measure -- defined on page 7 of the Q3 2013 Interim
Report. |
| 2. |
Working capital as at 30 September 2013 includes a TANESCO
receivable of US$16.6 million (31 December 2012: US$33.3 million)
and a net Songas receivable of US$6.1 million (31 December 2012:
US$5.9 million). Given the payment pattern, US$36.3 million of
TANESCO receivables in excess of 60 days have been discounted by
US$10.8 million and classified as long-term receivables. Total
short- and long-term TANESCO receivables as at 30 September 2013
total US$53.0 million prior to discounting. Subsequent to the end
of the quarter, TANESCO paid US$7.2 million; the current TANESCO
balance is US$52.8 million of which arrears total US$45.7
million.
|
Condensed Consolidated Interim Statement of
Comprehensive Income (Loss) (UNAUDITED)
| |
|
|
|
|
|
|
| |
|
|
THREE MONTHS ENDED |
NINE MONTHS ENDED |
| US$'000s except per share
amounts |
NOTE |
|
30 Sept
2013 |
30 Sept
2012 |
30 Sept
2013 |
30 Sept
2012 |
| |
|
|
|
|
|
|
| Revenue |
4 |
|
14,659 |
22,425 |
39,853 |
56,545 |
| Cost of sales |
|
|
|
|
|
|
| Production and distribution
expenses |
|
|
(1,150) |
(1,497) |
(2,564) |
(4,624) |
| Depletion expense |
9 |
|
(2,971) |
(2,324) |
(8,306) |
(6,279) |
| |
|
|
10,538 |
18,604 |
28,983 |
45,642 |
| General and administrative
expenses |
|
|
(3,327) |
(4,391) |
(10,287) |
(12,322) |
| Exploration asset impairment |
|
|
- |
(7,496) |
- |
(7,496) |
| Net finance costs |
5 |
|
(3,335) |
(407) |
(18,669) |
(689) |
| Profit before taxation |
|
|
3,876 |
6,310 |
27 |
25,135 |
| Taxation |
6 |
|
(1,976) |
(5,044) |
(1,919) |
(12,310) |
| Profit (loss) after
taxation |
|
|
1,900 |
1,266 |
(1,892) |
12,825 |
| Foreign currency translation
gain from foreign operations |
|
|
28 |
- |
(47) |
- |
| Total comprehensive income
(loss) for the period |
|
|
1,928 |
1,266 |
(1,939) |
12,825 |
| |
|
|
|
|
|
|
| Earnings (loss) per
share |
|
|
|
|
|
|
| Basic (US$) |
12 |
|
0.05 |
0.04 |
(0.05) |
0.37 |
| Diluted (US$) |
12 |
|
0.05 |
0.04 |
(0.05) |
0.36 |
| See accompanying notes to the condensed consolidated interim
financial statements. |
Condensed Consolidated Interim Statement of Financial
Position
(UNAUDITED)
| |
|
|
|
| |
|
AS AT |
|
| US$'000s |
NOTE |
30 Sept 2013 |
31 Dec 2012 |
ASSETS
Current Assets
Cash and cash equivalents |
|
30,290 |
16,047 |
| Trade and other receivables |
7 |
39,618 |
73,495 |
| Taxation receivable |
6 |
15,736 |
14,692 |
| Prepayments |
|
636 |
246 |
| |
|
86,280 |
104,480 |
| Non-Current Assets |
|
|
|
| Long-term trade receivable |
7 |
25,529 |
- |
| Exploration and evaluation
assets |
8 |
5,722 |
5,720 |
| Property, plant and equipment |
9 |
94,621 |
102,044 |
| |
|
125,872 |
107,764 |
| Total Assets |
|
212,152 |
212,244 |
| |
|
|
|
| EQUITY AND LIABILITIES |
|
|
|
| Current Liabilities |
|
|
|
| Trade and other payables |
10 |
46,353 |
45,496 |
| Bank loan |
11 |
4,138 |
5,842 |
| Taxation payable |
|
4,204 |
6,322 |
| |
|
54,695 |
57,660 |
| Non-Current
Liabilities |
|
|
|
| Deferred income taxes |
6 |
14,632 |
20,399 |
| Deferred additional profits
tax |
6 |
18,655 |
8,250 |
| |
|
33,287 |
28,649 |
| Total Liabilities |
|
87,982 |
86,309 |
| |
|
|
|
| Equity |
|
|
|
| Capital stock |
|
85,428 |
84,983 |
| Contributed surplus |
|
6,482 |
6,753 |
| Accumulated other comprehensive
income |
|
42 |
89 |
| Accumulated income |
|
32,218 |
34,110 |
| |
|
124,170 |
125,935 |
| Total Equity and Liabilities |
|
212,152 |
212,244 |
| See accompanying notes to the condensed consolidated interim
financial statements. Future operations (Note 1) |
| Contractual obligations and committed capital investments
(Note 14) |
| Contingencies (Note 15) |
| The consolidated condensed interim financial statements were
approved by the Board of Directors on 27 November
2013. |
Condensed Consolidated Interim Statement of Cash
Flows
(UNAUDITED)
| |
|
|
|
|
|
| |
|
THREE
MONTHS ENDED |
NINE MONTHS
ENDED |
| US$'000s |
NOTE |
30 Sept 2013 |
30 Sept 2012 |
30 Sept 2013 |
30 Sept 2012 |
| CASH FLOWS FROM OPERATING
ACTIVITIES |
|
|
|
|
|
| Profit after taxation |
|
1,900 |
1,266 |
(1,892) |
12,825 |
| Adjustment for: |
|
|
|
|
|
| |
Depletion and depreciation |
9 |
3,071 |
2,393 |
8,573 |
6,549 |
| |
Exploration asset impairment |
9 |
- |
7,496 |
- |
7,496 |
| |
Provision for doubtful debt |
7 |
1,200 |
- |
8,300 |
- |
| |
Discount on long-term receivable |
5,7 |
2,900 |
- |
10,800 |
- |
| |
Stock-based compensation |
12 |
24 |
80 |
(289) |
701 |
| |
Deferred income taxes |
6 |
(800) |
2,019 |
(5,767) |
4,091 |
| |
Deferred additional profits tax |
6 |
3,979 |
900 |
10,405 |
2,289 |
| |
Interest received |
|
- |
(2) |
- |
(4) |
| |
Unrealised (gain) loss on foreign exchange |
|
(423) |
227 |
889 |
303 |
| Funds flow from operating
activities |
|
11,851 |
14,379 |
31,019 |
34,250 |
| Decrease (increase) in trade and other
receivables |
|
5,120 |
(11,086) |
13,789 |
(22,577) |
| Increase in taxation receivable |
|
(1,451) |
(2,293) |
(1,044) |
(9,198) |
| (Increase) decrease in
prepayments |
|
(207) |
342 |
(390) |
(197) |
| (Decrease) increase in trade and other
payables |
|
(3,056) |
7,653 |
1,198 |
14,688 |
| Increase (decrease) in taxation
payable |
|
774 |
93 |
(2,118) |
4,464 |
| Decrease (increase) in long-term
receivable |
|
1,450 |
- |
(25,529) |
- |
| Net cash flows from operating
activities |
|
14,481 |
9,088 |
16,925 |
21,430 |
| CASH FLOWS USED IN INVESTING
ACTIVITIES |
|
|
|
|
|
| Exploration and evaluation
expenditures |
|
- |
(5,469) |
(2) |
(10,026) |
| Property, plant and equipment
expenditures |
|
(744) |
(9,564) |
(1,150) |
(42,219) |
| Interest received |
|
- |
2 |
- |
4 |
| Increase in trade and other
payables |
|
- |
3,413 |
- |
13,817 |
| Net cash used in investing
activities |
|
(744) |
(11,618) |
(1,152) |
(38,424) |
| CASH FLOWS (USED IN) FROM FINANCING
ACTIVITIES |
|
|
|
|
|
| Bank loan proceeds |
11 |
- |
5,800 |
4,000 |
5,800 |
| Bank loan repayments |
11 |
(2,465) |
- |
(5,704) |
- |
| Proceeds from exercise of options |
12 |
174 |
- |
174 |
- |
| Net cash flow from (used in)
financing activities |
|
(2,291) |
5,800 |
(1,530) |
5,800 |
| Increase (decrease) in cash and
cash equivalents |
|
11,446 |
3,270 |
14,243 |
(11,194) |
| Cash and cash
equivalents at the beginning of the period |
|
18,766 |
20,194 |
16,136 |
34,680 |
| Effect of change in foreign
exchange on cash in hand |
|
78 |
(175) |
(89) |
(197) |
| Cash and cash equivalents at the
end of the period |
|
30,290 |
23,289 |
30,290 |
23,289 |
See accompanying notes to the condensed consolidated interim
financial statements.
Condensed Consolidated Interim Statement of Changes in
Shareholders' Equity
(UNAUDITED)
| US$'000 |
Capital stock |
Contributed
surplus |
Cumulative
Translation
adjustment |
Accumulated
Income |
Total |
| Note |
12 |
|
|
|
|
| Balance as at 1 January 2013 |
84,983 |
6,753 |
89 |
34,110 |
125,935 |
| Options exercised |
445 |
(271) |
- |
- |
174 |
| Foreign currency translation adjustment on foreign
operations |
- |
- |
(47) |
- |
(47) |
| Loss after tax for the period |
- |
- |
- |
(1,892) |
(1,892) |
| Balance as at 30 Sept 2013 |
85,428 |
6,482 |
42 |
32,218 |
124,170 |
| |
|
|
|
|
|
| |
|
|
|
|
|
| US$'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 |
- |
- |
- |
12,825 |
12,825 |
| Balance as at 30 Sept 2012 |
84,610 |
6,988 |
- |
28,606 |
120,204 |
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;
anticipated effect of payment guarantee on future gas deliveries
and application by TANESCO for tariff increase on TANESCO
receivable; the Government's target onstream date for the National
Gas Infrastructure Project; status of execution of a full field
development plan for Songo Songo,
including the funding thereof; incremental gas sales volumes;
status of negotiations with the TPDC regarding a sales agreement
for incremental gas volumes; potential taxes and penalties payable
by the Company to the TRA and the Company's beliefs regarding the
findings and its plans to appeal the process if, and when, an
assessment is received; 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; failure to obtain funding for
full field development plan for Songo
Songo; risk that the Company will be subject to a tax
assessment and be required to pay additional taxes and penalties;
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 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; that the Company will successfully
negotiate agreements; that the Company will obtain funding for full
field development plan for Songo
Songo; 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.