Orca Energy Group Inc. Announces Completion of Q3 2025 Interim Filings

Executive Summary

• Orca Energy Group Inc. released its Q3 2025 financial results, reporting a significant surge in net income attributable to shareholders driven by the reversal of loss allowances and interest income following the collection of $52.0 million in arrears from TANESCO.
• The company reported a strategic shift in operations, with capital expenditures dropping 98% year-over-year in Q3 as the focus shifts to safety and maintenance, while gas deliveries increased 7% due to higher industrial demand.
• The release highlights ongoing legal and regulatory challenges in Tanzania, including active ICSID arbitration against the Government of Tanzania, a dispute with Swala Oil & Gas, and the critical need for a license extension for the Songo Songo field, which is expiring in October 2026.

Key Details

• Financial Performance (Q3 2025 vs Q3 2024):
  • Net Income: Increased 834% to $19.475 million ($0.99 per share).
  • Revenue: Decreased 12% to $21.746 million, primarily due to increased TPDC revenue share and lower Cost Gas recoveries.
  • Operating Cash Flow: Increased 215% to $32.294 million.
  • Capital Expenditures: Decreased 98% to $182,000 (down from $9.354 million), reflecting deferred maintenance and a shift in spending priorities.
• Financial Performance (Nine Months Ended Sept 30, 2025):
  • Net Income: Increased 889% to $41.978 million ($2.12 per share).
  • Revenue: Decreased 4% to $71.411 million.
  • Operating Cash Flow: Increased 306% to $84.506 million.
• Operational Metrics:
  • Gas Deliveries: Increased 7% (4.7 MMcfd) in Q3 to 71.1 MMcfd; increased 4% (2.7 MMcfd) year-to-date to 70.5 MMcfd.
  • Industrial Demand: Industrial gas deliveries rose 18% in Q3 to 20.9 MMcfd.
  • Power Demand: Power gas deliveries decreased 3% in Q3 to 50.2 MMcfd, attributed to increased hydroelectric availability from the Julius Nyerere Hydropower Project.
• TANESCO Settlement:
  • TANESCO paid the full $52.0 million settlement amount under the April 2025 agreement.
  • The payment covered $33.7 million in principal and $18.3 million in default interest.
  • Orca waived the remaining balance of default interest (~$52.2 million) upon full payment.
  • Orca retained approximately $35.5 million of the settlement; TPDC received the balance.
  • The long-term receivable provision of $22.0 million was fully reversed.
• Legal and Regulatory Developments:
  • ICSID Arbitration: PAEM and PAET filed Requests for Arbitration with ICSID on August 1, 2025, against the Government of Tanzania and TPDC for breaches of the BIT, PSA, and Gas Agreement. ICSID registered the claims on August 28, 2025. Tribunal constitution is expected by end of 2025.
  • Swala Dispute: Swala Oil & Gas filed a claim in Tanzania High Court on April 25, 2025, seeking ~$237.9 million in damages. Orca filed an anti-suit injunction (ASI) in the High Court of England and Wales on October 24, 2025, to enjoin Swala from pursuing the dispute in Tanzania. A security for costs application is scheduled for ruling on November 21, 2025.
  • License Extension: The Songo Songo License expires in October 2026. The Ministry of Energy has not yet submitted an economically viable proposal for extension. Orca states that the uncertainty significantly impacts the long-term sustainability of the business.
• Balance Sheet & Liquidity:
  • Cash and Equivalents: $127.9 million (up from $90.1 million at Dec 31, 2024).
  • Working Capital: $56.2 million (up from $21.9 million at Dec 31, 2024).
  • Hard Currency Cash: $117.3 million.
  • Restricted Cash: $24.7 million posted as security for an appeal regarding a Tanzania High Court judgment related to a 3D seismic contractor.
• Outlook:
  • 2025 volume guidance remains unchanged.
  • 2026 production guidance is between 60–65 MMcfd, reflecting field decline and seasonal hydro variations.
  • The Board is undertaking a comprehensive strategic review to mitigate risks associated with the license extension and legal disputes.

Notable Quotes

• Jay Lyons, CEO: “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.”
• Jay Lyons, CEO: “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.”
• Jay Lyons, CEO: “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.”