Orca units submit arbitration requests against Tanzania

Mr. Jay Lyons reports ORCA ENERGY GROUP INC. ANNOUNCES ARBITRATIONS AGAINST THE UNITED REPUBLIC OF TANZANIA AND TANZANIA PETROLEUM DEVELOPMENT CORPORATION OVER US$1.2 BILLION PROJECT Orca Energy Group Inc. has provided an update: Its subsidiary, Pan African Energy Corp. (Mauritius) (PAEM), submitted a request for arbitration to the International Centre for Settlement of Investment Disputes (ICSID), an arm of the World Bank, against the United Republic of Tanzania for various breaches by Tanzania of the investment protections provisions of the agreement on promotion and reciprocal protection of investment between the government of the Republic of Mauritius and the government of the United Republic of Tanzania (the BIT). Its subsidiary, PanAfrican Energy Tanzania Ltd. (Jersey) (PAET), submitted two separate requests for arbitration to ICSID against Tanzania and Tanzania Petroleum Development Corp. (TPDC), a petroleum corporation owned and controlled by Tanzania, for breaches of: The production-sharing agreement (PSA) between the government of Tanzania (the GoT), TPDC and PAET dated Oct. 11, 2001; The gas agreement (GA) between the GoT, TPDC, Songas Ltd. and PAET dated Oct. 11, 2001. The three 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 and breach multiple obligations under the BIT, the PSA and the GA. These breaches include: Failing to extend the Songo Songo development licence: In April, 2023, PAET formally requested that TPDC apply for an extension of the licence, which is set to expire on Oct. 10, 2026. TPDC is contractually required to make such application upon a request from the company. TPDC failed to submit the application in a timely manner. When it eventually did so in late November, 2024, it acted unilaterally -- without consulting PAEM or PAET -- and proposed terms that would render the project commercially unviable. Since then, Tanzania has refused to engage in any substantive dialogue on the status or terms of the application. These actions are a co-ordinated effort to pressure the company to exit the project. Forcing continuation of the Protected Gas regime: Protected Gas, as defined in the PSA, was owned by TPDC and sold to Songas and Tanzania Portland Cement PLC until July 31, 2024. Following July 31, 2024, Protected Gas ceased and all production from the Songo Songo gas field constituted additional gas (as defined in the PSA), which PAET and TPDC are entitled to sell on commercial terms until the expiry of the PSA in October, 2026. Contrary to the express terms of the PSA and the GA, TPDC -- under the direction of the GoT -- imposed the continued application of the Protected Gas regime on the project, undermining the commercial balance agreed in the project agreements. Failing to pay royalties: TPDC has failed to pay royalties owing under the project's contractual framework, which it was required to do, and has instead attempted to compel PAET to cover these unpaid obligations, in direct violation of the PSA and the GA. Broader pattern of harassment: On a continuing basis, various Tanzanian state agencies have subjected PAET to regulatory and administrative pressures and harassment, further eroding the stability and security of the investment environment for the project, PAEM and PAET. Prior to pursuing the claims through arbitration proceedings, on Aug. 7, 2024, PAEM and PAET jointly issued a notice of dispute under the BIT, PSA and GA to Tanzania and TPDC. Over the subsequent year, PAEM and PAET made extensive efforts to resolve these issues amicably. However, the lack of meaningful engagement from Tanzania and TPDC has left PAEM and PAET with no alternative but to pursue formal arbitration proceedings. While the precise amount of damages for the claims will be determined in the course of the arbitration proceedings, the company currently values the project at approximately $1.2-billion (U.S.). As the arbitration proceeds, PAEM and PAET expect to appoint a quantum expert to prepare a professional damages assessment for the arbitration tribunal. The company will update shareholders as this evolves. In all three proceedings, PAEM and PAET are represented by Boies Schiller Flexner LLP, an international law firm with a strong record in international arbitration, including successful claims against Tanzania. Jay Lyons, chief executive officer of Orca, commented on this announcement: "Following a mutually successful partnership over the past 20 years, we were disappointed to have to have been compelled to initiate international arbitration proceedings against the United Republic of Tanzania and Tanzania Petroleum Development Corp. Since formally submitting our application for extension of the licence in April, 2023, the company has made every reasonable effort to engage in a constructive dialogue with all parties, with the aim of continuing and expanding operations under the licence. Our goal remains clear: to unlock the full value of this vital project for all stakeholders -- including the government of Tanzania, its citizens and local communities. Despite our continued willingness to reach an amicable resolution, the lack of meaningful progress has left us with no viable alternative but to take decisive legal action to protect the rights of PAET and PAEM and the interests of our shareholders. We will provide further updates in due course." About Orca Energy Group Inc. Orca Energy Group is an international public company engaged in natural gas development and supply in Tanzania through its subsidiary, PAET. Orca trades on the TSX Venture Exchange under the trading symbols ORC.B and ORC.A. We seek Safe Harbor.