Orca Exploration Group Inc. has entered into a loan agreement with International Finance Corp. (IFC), a member of the World Bank Group, for a $60 million investment in the company's operating subsidiary, PanAfrican Energy Tanzania Ltd. (PAET).
Proceeds of the loan will be used to fund part of an estimated $120 million first phase of a Songo Songo Main Field development program (the Offshore Program) currently being undertaken using the Paragon M826 drilling rig (commenced in September).
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 workover outcomes.
Since program commencement, previously suspended production wells SS-5 and SS-9 have been worked over and recompleted, and have been restored to full productive capacity estimated to be approximately 35 million standard cubic feet per day (MMscf/d) per well.
The Offshore Program is intended to restore and expand field productive capacity from approximately 83 MMscf/d prior to the program to approximately 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 approximately 102 MMscf/d, and of 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 $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.