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Drilling phase complete on the Songo Songo Field development

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Oilfield Technology,

Orca Exploration Group Inc has announced the successful completion of its offshore workover and drilling programme (the ‘Off-Shore Programme’) and the release of the Paragon M826 mobile drilling workover rig. The Off-Shore Programme of the Songo Songo Main Field development programme included workovers on three existing wells (SS-5, SS-7 and SS-9) and the drilling of one new development well, SS-12. Phase 1 of the development programme also includes the completion of the SS-12 production platform, flowlines and tie-in facilities connecting SS-12 to the company's gas processing facilities and a refrigeration system required to ensure field production stability to enable the company to produce wells into the newly built National Natural Gas Infrastructure Project (NNGIP). The total cost of Phase 1 of the development programme was originally estimated to cost US$120 million, however, now that the Off-Shore Programme has been completed, the company expects that Phase 1 of the development programme to have a total cost of under US$80 million with costs incurred to date of approximately US$68 million. The reduction in costs was a result of being able to successfully workover the three wells without having to do any side-tracking, efficiencies achieved during the work-overs, and work scope changes which reduced the original estimated time required to complete Phase 1. The full development programme provides for additional workovers, compression systems and additional infrastructure to ensure all production commitments are met through to the end of the licence in 2026.

The Offshore Programme was designed to: (i) put safe existing suspended and operating production wells; (ii) 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 (iii) provide additional operational redundancy and deliverability for future additional gas sales.

Increased production

The Offshore Programme has successfully increased production capacity from approximately 83 million ft3 per day prior to the development programme to current production capabilities of approximately 150 million ft3. Upon completion of the platform for SS-12 and the tie-in to production facilities, production capabilities are expected to be in excess of 185million ft3. The field is now capable of both filling the existing Songas infrastructure to capacity of approximately 102 MMscfd, as well as providing additional gas volumes to the NNGIP. The company is currently negotiating terms for the sales agreement to the NNGIP with the Tanzania Production and Development company (TPDC). Until the agreement is signed, the company's production is limited by infrastructure and contractual constraints, producing an average of 90 ft3 for the fourth quarter of 2015 and is expected to average 94 ft3 in 2016.

Orca currently supplies gas primarily for power generation to the Tanzania Electric Supply Company (TANESCO), Songas, and 38 industrial customers in the Dar es Salaam area. Orca committed to the current expansion programme to ensure that the company is playing its part in meeting Tanzania's urgent need for increased power generation and energy security. The use of natural gas from the Songo Songo Main Field has made a significant contribution to Tanzania's economy and is estimated to have saved Tanzania over US$6 billion in other fuel costs since commercial operations began in 2004 according to Tanzanian government sources. Orca's Tanzania operations are managed by the company's wholly owned subsidiary, Pan African Energy Tanzania Limited (PAET), headquartered in Dar es Salaam. PAET has for the past 10 years been the lead private sector investor in Tanzania's gas industry.

"We are delighted with the success of the Offshore Programme and the significant cost savings achieved, this reflects the strength of our operation’s team," said Orca's Chairman and Chief Executive Officer, David Lyons, "The development programme has enabled the company to significantly increase production capacity in Tanzania and ensure the continued reliable supply of natural gas to our customers."

PAET loan facility

In order to complete the Off-Shore Programme, the company's wholly owned subsidiary, PAET has utilised the US$60 million loan facility with International Finance Corporation which was signed on 29 October 2015. The final US$40 million drawdown of the loan was received today. For further details on the Loan, please see the copy of the agreement for the loan which is filed under Orca's issuer profile on SEDAR at

Adapted from a press release by Louise Mulhall

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