Orca Energy Group Inc. Announces Completion of Q2 2025 Interim Filings

Executive Summary

• Orca Energy Group Inc. released its interim financial results for the three and six months ended June 30, 2025, reporting a massive surge in net income attributable to shareholders driven by the reversal of loss allowances following the collection of long-term arrears from TANESCO.
• The company secured a $52.0 million settlement agreement with TANESCO for unpaid gas deliveries, with $34.1 million already received as of August 14, 2025, significantly boosting operating cash flows and working capital.
• Operational performance showed a 9% increase in daily gas sold for Q2 2025 compared to Q2 2024, with industrial demand growing over 40%, while capital expenditures decreased by 98% in Q2 due to deferred maintenance and weather delays.
• The company faces significant legal headwinds, including an ICSID arbitration filed against Tanzania and TPDC regarding investment treaty breaches, and a $237.9 million claim filed by Swala Oil & Gas alleging breach of contract and conspiracy.

Key Details

• Financial Performance (Q2 2025 vs Q2 2024):
  • Revenue: $24.3 million (down 3%).
  • Net Income Attributable to Shareholders: $22.4 million (up 1,786%).
  • Net Income Per Share (Basic/Diluted): $1.13 (up 1,786%).
  • Net Cash Flows from Operating Activities: $31.9 million (up 91%).
  • Capital Expenditures: $44,000 (down 98%).
• Financial Performance (Six Months Ended June 30, 2025):
  • Revenue: $49.7 million (down 1%).
  • Net Income Attributable to Shareholders: $22.5 million (up 943%).
  • Net Income Per Share (Basic/Diluted): $1.14 (up 943%).
  • Net Cash Flows from Operating Activities: $52.2 million (up 394%).
  • Capital Expenditures: $592,000 (down 82%).
• TANESCO Settlement Agreement:
  • Signed April 15, 2025, for $52.0 million to settle unpaid amounts totaling $104.2 million (as of Jan 9, 2025).
  • Settlement comprises $33.7 million principal and $18.3 million of default interest; remaining interest waived upon full payment.
  • Payment schedule: Weekly installments from April to September 2025.
  • Orca expects to retain ~$29.4 million of the settlement; TPDC retains the balance.
  • As of Aug 14, 2025, $34.1 million received; $17.9 million balance remaining.
  • $16.1 million of Q2 cash received attributed to long-term gas receivable; provision reversed in full.
  • Subsequent to Q2: Invoiced $5.0 million for July; received $5.8 million for current supplies and $9.9 million under settlement.
• Operational Metrics:
  • Daily Average Gas Delivered/Sold (Q2): 68.3 MMcfd (up 9% YoY).
  • Industrial Gas Sales (Q2): 18.5 MMcfd (up 43% YoY).
  • Power Gas Sales (Q2): 49.8 MMcfd (flat YoY).
  • Weighted Average Price (Q2): $5.06/mcf (up 2% YoY).
  • Operating Netback (Q2): $2.67/mcf (down 16% YoY).
• Balance Sheet & Liquidity:
  • Working Capital: $49.3 million (Dec 31, 2024: $21.9 million).
  • Cash and Cash Equivalents: $98.6 million (Dec 31, 2024: $90.1 million).
  • Hard Currency Cash: $87.7 million.
  • $24.7 million posted as security for an appeal regarding a seismic judgment from the Tanzania High Court.
• Legal & Regulatory Developments:
  • ICSID Arbitration: On Aug 1, 2025, PAEM and PAET filed Requests for Arbitration with ICSID against Tanzania and TPDC for breaches of the BIT, PSA, and Gas Agreement, threatening the viability of the Songo Songo Gas-to-Electricity Project.
  • Swala Dispute: Swala Oil & Gas filed a claim in Tanzanian High Court on April 25, 2025, seeking ~$237.9 million in damages for alleged breach of oral contract, conspiracy, and unjust enrichment. Orca believes the claim has limited merit.
  • License Extension: MoE advised PAET that the Songo Songo Development License extension application is being processed; Orca urged immediate engagement to resolve the matter.
• Capital Expenditure Updates:
  • Q1/Q2 2025 CapEx related to flowline replacements on SS-5 and SS-9 wells, deferred from 2024.
  • SS-5 flowline replacement deferred to Q2 2025 due to weather; project expected to resume Q4 2025 with no expected increase in total lump-sum costs.
  • Company plans to focus on safety and maintenance for the remainder of the license, reviewing capital allocation policy.

Notable Quotes

• Jay Lyons, CEO: “Operationally, Orca continues to perform in line with expectations, delivering a 9% increase in daily gas sold, compared with Q2 2024. We continue to see robust demand from our industrial customers, with sales growing in excess of 40% from H1 2024. I am also pleased to report that Orca remains in a strong financial position, with working capital of ca.$50 million and total cash and cash equivalents of ca.$100 million.”
• Jay Lyons, CEO: “In light of the recently filed arbitration proceedings by PAEM and PAET, Orca is carefully considering its capital expenditures and capital allocation policy for the remainder of the licence. Ensuring that we continue to maintain the high levels of safety we have achieved since entering Tanzania, along with performing essential maintenance work, will be our core focus going forward, with a review of cost efficiencies also likely being considered.”