TORTOLA, British Virgin Islands, Nov. 27, 2025 (GLOBE NEWSWIRE) — Orca Energy Group Inc. (“Orca” or the “Company” and includes its subsidiaries and affiliates) (TSXV:ORC, ORC.B)) today announces that it has filed its condensed consolidated interim financial statements and management’s discussion and analysis for the three and nine month periods ended September 30, 2025 (“Q3 2025“) with the Canadian securities regulatory authorities. All amounts are in United States dollars (“$“) unless otherwise stated.
Jay Lyons, Chief Executive Officer, commented:
“Orca delivered strong operational results in Q3 2025, with gas deliveries rising 7% over the quarter and 4% year-to-date. The growth was driven by higher industrial consumption and increased demand for our services and products.”
“The Company ended the period with cash and cash equivalents of $127.9 million and working capital of $56.2 million, supported by the collection of arrears from TANESCO under the April 2025 Settlement Agreement.”
“We continue to actively manage the ongoing legal proceedings in Tanzania, remaining focused on protecting the Company’s rights and our shareholders’ interests. Looking ahead, Orca will keep its capital expenditures and allocation under review as we look to continue to focus on safety, essential maintenance, and cost efficiency across our operations.”
Highlights
Revenue decreased by 12%, or $3.0 million, for Q3 2025 and by 4%, or $3.3 million, for the nine months ended September 30, 2025 over the comparable prior year periods, primarily as a result of the increases in the Tanzanian Petroleum Development Corporation (“TPDC”) share of revenue as an outcome of decreased capital expenditures and lower Cost Gas revenue (as defined in the Management’s Discussion & Analysis for the three and nine months ended September 30, 2025) recoveries by the Company.
Gas deliveries increased by 7%, or 4.7 MMcfd, for Q3 2025 and by 4%, or 2.7 MMcfd, for the nine months ended September 30, 2025 compared to the same prior year periods. The increases were mainly a result of increased consumption by industrial customers due to a higher demand for services and products. Additionally, the end of the Protected Gas (defined below) regime Q3 2024 resulted in higher deliveries of Additional Gas (defined below) to Tanzania Portland Cement PLC (“TPCPLC”) from August 2024 onward. This was partially offset by the completion of the Julius Nyere Hydropower Project in 2024 leading to increased availability of hydro power and causing lower lifting from power customers.
On August 7, 2024, PanAfrican Energy Tanzania Limited (“PAET”) and Pan African Energy Corporation (Mauritius) (“PAEM“) issued a notice of dispute (the “Notice of Dispute”) in respect of an investment treaty claim against the Government of Tanzania (the “GoT”) for breach of the Agreement on Promotion and Reciprocal Protection of Investment between the Government of the Republic of Mauritius and the GoT (the “BIT”), and a contractual dispute against the GoT and TPDC, for breaches of the: (i) the Production Sharing Agreement between PAET, TPDC and the GoT (the “PSA”), and (ii) the Gas Agreement between the GoT, TPDC, Songas Limited (“Songas”) and PAET (the “Gas Agreement”). Initial meetings with both the Advisory and Coordinating Committees were held during the week of October 14, 2024 without any resolution on the key issues in dispute. The matters have been further referred to the relevant entity’s chief executive officers and working groups in accordance with the dispute resolution process. Discussions continued with meetings held in January and March 2025 without resolution. The Company’s Counsel subsequently submitted a letter to the Ministry of Energy (the “MoE”), requesting an urgent meeting to address the issues. In July 2025, our counsel received a letter from the Permanent Secretary to the MoE, dated June 26, 2025, advising PAET that the MoE was working on the Songo Songo Development License (the “License”) extension application and that feedback would be available in due course. The letter also advised against interference in the independence of the MoE, in the interests of good governance and proper processing of the application. The Company’s Counsel submitted a response to the MoE advising that the approaches made to the MoE were reasonable and proportionate enquiries into the status of the application, given the lengthy inaction and engagement to date. The letter urged immediate engagement to resolve the matter of the License extension. The MoE has recently proposed the parties meet to discuss the current License and terms of a License extension proposal submitted by TPDC to be made for consideration by the Minister and GoT. The Company has requested the MoE submit an economically viable proposal for review before parties agree to meet. To date, no proposal in response to this request has been received.
On April 15, 2025, PAET and TPDC signed a settlement agreement with the Tanzanian Electric Supply Company Limited (“TANESCO”) (the “Settlement Agreement”), for TANESCO to pay PAET $52.0 million for unpaid amounts owing by TANESCO for deliveries of natural gas from the Songo Songo gas field and late payment interest, which unpaid amounts totaled $104,164,507.41 as of January 9, 2025, comprising of $33.7 million of principal amount owing and approximately $70.5 million of default interest. The Settlement Agreement required TANESCO to pay the Tanzanian Shilling equivalent of $52.0 million, comprised of the $33.7 million principal amount and $18.3 million representing a portion of the default interest owed by TANESCO. It was agreed that the remaining balance of the default interest owing by TANESCO would be waived if TANESCO paid the settlement amount when required and in full while remaining current on amounts owed. As at September 30, 2025, TANESCO has paid the full $52.0 million due under the Settlement Agreement, and the Company has duly waived the remaining balance of the default interest owing by TANESCO. Payments on account of the settlement amount have been allocated between PAET and TPDC in accordance with the PSA. Pursuant to the PSA, the Company has retained approximately $35.5 million of the settlement amount with TPDC receiving the balance.
Net income attributable to shareholders increased by 834%, or $17.4 million, for Q3 2025 and by 889%, or $37.7 million, for the nine months ended September 30, 2025 compared to the same prior year periods, primarily as a result of the reversal of loss allowance and the recognition of interest income following the collection of TANESCO long-term arrears and default interest pursuant to the Settlement Agreement.
Net cash flows from operating activities increased by 215%, or $22.0 million, for Q3 2025 and by 306%, or $63.7 million, for the nine months ended September 30, 2025 compared to the same prior year periods primarily as a result of higher payments from TANESCO in Q2 2025 and Q3 2025 pursuant to the Settlement Agreement.
Capital expenditures decreased by 98%, or $9.2 million, for Q3 2025 and by 94%, or $12.0 million, for the nine months ended September 30, 2025 compared to the same prior year periods. The capital expenditures in Q1, Q2 and Q3 2025 primarily related to the costs of flowlines replacements on SS-5 and SS-9 wells, deferred from 2024 at the request of the GoT. Following the successful replacement of the SS-9 flowline, the flowline replacement program for the SS-5 well was further deferred to Q4 2025. Inclement weather through the wet season and SE (Kusini) winds caused delay to the completion of the project and with it the employment of some capital. Given the lump-sum costs for the project, total capital expenditure is not expected to increase when the project resumes in Q4 2025. The capital expenditures in Q1, Q2 and Q3 2024 primarily related to the costs of the SS-7 well workover program.
The Company exited Q3 2025 with $56.2 million in working capital (December 31, 2024: $21.9 million) and cash and cash equivalents of $127.9 million (December 31, 2024: $90.1 million). Cash held in hard currencies (USD, Euro, GBP, CDN) was $117.3 million, as at September 30, 2025 (December 31, 2024: $87.1 million). Of the total cash balance of $127.9 million, $24.7 million was posted as security in respect to an appeal initiated by the Company relating to a judgment received from the Tanzania High Court (Commercial Division) for a claim brought by a contractor against PAET relating to alleged losses arising from PAET’s termination of a contract relating to the Company’s 3D seismic acquisition program. PAET is currently appealing the judgement.
The TANESCO long-term receivable as at December 31, 2024 was $22.0 million and had been fully provided for. As at September 30, 2025, the Company has received all amounts due under the Settlement Agreement. Accordingly, the provision has been reversed in full and the long-term receivable balance as at September 30, 2025 is $ nil. Subsequent to September 30, 2025, the Company has invoiced TANESCO $4.8 million for October 2025 gas deliveries and TANESCO has paid the Company $4.5 million.
On April 25, 2025, Swala Oil & Gas (Tanzania) Plc, in liquidation (“Swala”) submitted a claim to the Tanzania High Court (the “Court”) against Orca, PAEM and PAET for alleged breach of oral contract, unlawful conspiracy, unjust enrichment and breach of fiduciary duty. Swala claims damages of approximately $237,930,013 in addition to pre- and post-judgment interest. This breaks down to: (i) $167,930,013 for damages arising from breach of contract or conspiracy; (ii) $50.0 million for general damages, and (iii) $20.0 million for punitive and exemplary damages. The Company believes there is no merit to the claim (the “Swala Dispute”). In August 2025, ORCA, PAEM, and PAET filed a security for costs application against Swala. The Court is scheduled to rule on this application on November 21, 2025. If successful, and if Swala fails to pay any ordered security within the requisite period of time, the Swala Dispute will be dismissed. In September 2025, Swala filed an application (the “Prejudgment Application”) seeking certain prejudgment orders: (a) an Order that Orca, PAEM, and PAET pay the entire specified damages amount of $167,930,013 (which has not been proven) as security, or (b) in the alternative, an order for the attachment of all PAET bank accounts in Tanzania, or (c) in the further alternative an order requiring: (i) Orca not to pay any money to any owner of Class A Common Shares, Class B Subordinate Shares, First Preference Shares, an interest in Orca’s Long-term Retention Plan, or an owner in any new securities created or issued by Orca, (ii) requiring PAEM not to transfer any money in any manner or purpose, to any bank outside of the Republic of Mauritius other than to comply with third-party obligations in the normal course of business, and (iii) requiring PAET not to transfer any money to any bank outside of Tanzania other than to comply with third-party obligations in the normal course of business. The relief sought in the Prejudgment Application is extraordinary and the law requires Swala to strictly satisfy the requisite legal conditions of cogent evidence. The Company does not believe Swala has done so. The next court appearance for the Prejudgment Application is scheduled for December 8, 2025, where this matter will come up “for mentions”, following which a hearing on the merits of the Prejudgment Application will need to be scheduled.
On 24 October 2025, the Company filed an anti-suit injunction (the “ASI”) against Swala on behalf of Orca, PAEM, and PAET in the High Court of England and Wales Commercial Court, seeking to enjoin Swala from taking steps to pursue the Swala Dispute in Tanzania. If successful, and if Swala fails to comply with the order, its failure may result in a finding of contempt of court and exposure for both Swala and the liquidator to commercial and criminal sanctions.
On August 1, 2025, PAEM submitted a Request for Arbitration (an “RFA”) to the International Centre for Settlement of Investment Disputes (“ICSID”), an arm of the World Bank, against the GoT for various breaches of the investment protections provisions of the BIT; and PAET submitted two separate RFA’s to ICSID against the GoT and TPDC for breaches of the PSA and the Gas Agreement. The three claims (the “Claims”) arise out of a series of actions and omissions by Tanzania and TPDC that threaten the viability of the Songo Songo Gas-to-Electricity Project (the “Project”) and breach multiple obligations under the BIT, the PSA and the Gas Agreement. On August 28, 2025, ICSID registered all three RFAs. PAEM has appointed its arbitrator for the BIT proceedings, and we expect the tribunal in this case to be constituted by the end of 2025. PAET, the GoT, and TPDC have agreed to consolidate the two proceedings brought under the PSA and the Gas Agreement, and once this consolidation is complete the parties will proceed with the tribunal appointment process.
Considering the anticipated reduction in capital expenditure going forward, with safety and maintenance being the main focus for the remainder of the License, the Company intends to review its capital allocation policy in the near term and will update the market as appropriate.
Financial and Operating Highlights for the Three and Nine Months Ended September 30, 2025
Three months
ended September 30
% Change
Nine months
ended September 30
% Change
(Expressed in $’000 unless indicated otherwise)
2025
2024
Q3/25 vs
Q3/24
2025
2024
Ytd/25 vs
Ytd/24
OPERATING
Daily average gas delivered and sold (MMcfd)
71.1
66.4
7
%
70.5
67.8
4
%
Industrial
20.9
17.7
18
%
19.5
14.8
32
%
Power
50.2
48.7
3
%
51.0
53.0
(4
)%
Average price ($/mcf)
Industrial
7.79
8.71
(11
)%
7.86
8.94
(12
)%
Power
3.95
3.89
2
%
3.96
3.87
2
%
Weighted average
5.08
5.18
(2
)%
5.04
4.98
1
%
Operating netback ($/mcf)
2.00