Orca Exploration operations update and officer appointment

        






Orca Exploration operations update and officer appointment

TSX-V: ORC.A, ORC.B

TORTOLA, British Virgin Islands, Oct. 19, 2012 /CNW/ - Orca Exploration Group Inc. ("Orca" or "the Company") and its operating subsidiary PanAfrican Energy Tanzania Limited ("PAT" or "PanAfrican") jointly announce that its new SS-11 well is onstream which is expected to maintain and strengthen reliability of gas production from Tanzania's Songo Songo gas field.

The new production well SS-11, completed at Songo Songo Island in June 2012, was flowline connected to the on-island gas processing plant and successfully brought onstream 3 October 2012.  SS-11 is currently producing approximately 30 million cubic feet per day ("MMcfd") of natural gas.

Announcing this development, Orca Chairman and Chief Executive Officer W. David Lyons stated, "We congratulate our team in Tanzania for bringing this well onstream to ensure sustained gas production capacity. We also congratulate our local Tanzanian contractors on this project. They supplied 100% local content for this installation and construction project. The installation involved developing an innovative solution to a unique engineering challenge which was met by local construction of a complex barge to lay the pipeline. We delivered the project on budget and in roughly one-third of the time."

With SS-11 now onstream Orca has taken the SS-9 well off production and suspended it as planned.  It is anticipated that production from the new SS-11 well can be increased to over 40 MMcfd with the planned debottlenecking of the gas gathering infrastructure expected to be completed over the next few months.

The SS-9 well, which was producing approximately 30 MMscf/d, has been permanently suspended due to a tubing leak resulting in rising casing annulus pressures. To ensure sustainable production levels, the Company is also reviewing the integrity of the SS-3 and SS-4 wells which are currently producing a total of approximately 18 MMcfd. Orca's current view is that to ensure continued safe operations, SS-3 will need to be suspended immediately and, depending on the results of the tests, SS-4 may need to be suspended over the next number of weeks. The Company plans to make up the production shortfall with additional volumes from SS-10 and SS-11.  As a result no material change in field production levels of approximately 101 MMscf/d is currently anticipated. There will be, however, no redundant capacity in the facility or pipeline until additional wells can be drilled in the field and facilities expanded.

The SS-9, SS-3 and SS-4 wells were drilled by the Tanzanian Petroleum Development Corporation ("TPDC") between 1976 and 1983 and have reached the end of their useful life. The SS-10 well was drilled by the Company in 2007. Plans for an additional development well, SS-12, were placed on hold until the re-negotiation of certain terms of the Songo Songo Production Sharing Agreement and related issues arising from the Government Negotiating Committee discussions have been fully resolved as well as the significant outstanding TANESCO receivable having been paid.

With the tie-in of SS-11, PanAfrican Energy has achieved a number of important milestones in Tanzania, including the first offshore heavy lift achieved in East Africa and the first shallow water application of Technip's technically advanced Coflexip pipe in East Africa.

Officer appointment

The Company also wishes to announce the appointment of David K. Roberts as Vice President Operations and Country Manager. Mr. Roberts has a BSc in Petroleum Engineering from the Colorado School of Mines and has over 20 years experience in international oil & gas production and drilling operations.  His early career was spent with Perenco where he progressed from Field Engineer to Engineering & Operations Manager. From 1999 to 2006, Mr. Roberts assumed increasing operating responsibilities at Orca's predecessor company in Gabon, Pan-Ocean Energy Ltd., ultimately as General Manager, where was instrumental in managing that company's growth from 400 barrels of oil per day ("bpd") to 20,000 bpd. Mr. Roberts will be based in Dar es Salaam and replaces Andrew Brown as Country Manager.

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, and oil and gas appraisal in Italy. Orca trades on the TSXV under the trading symbols ORC.B and ORC.A.

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 effect of the S-11 well on maintaining and strengthening reliability of gas production from the Songo Songo gas field; current production from the S-11 well; anticipated increases to production from the S-11 well; expected timing of debottlenecking of the gas gathering infrastructure; the Company's expectations regarding suspension of the SS-3 and SS-4 wells and plans to make up the production shortfall from additional volumes from the SS-10 and SS-11 wells; and status of re-negotiating certain terms of the Songo Songo Production Sharing Agreement, resolution of related issues arising from the Government Negotiating Committee discussions and payment of the outstanding TANESCO receivable. 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 Production Sharing Contract 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; 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.

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