Status and plans June 2007

Transcription

1 Status and plans June 2007 Page 1

2 Forward looking statements and risks This presentation contains certain forward-looking statements that involve substantial known and unknown risks and uncertainties, certain of which are beyond Orca s control, including the impact of general economic conditions in the areas in which the company operates, civil unrest, industry conditions, changes in laws and regulations including the adoption of new environmental laws and regulations and changes in how they are interpreted and enforced, increased competition, the lack of availability of qualified personnel or management, fluctuations in commodity prices, foreign exchange or interest rates, stock market volatility and obtaining required approvals of regulatory authorities. In addition there are risks and uncertainties associated with gas operations. Therefore, Orca s actual results, performance or achievement could differ materially from those expressed, or implied by, these forward-looking estimates and, accordingly, no assurances can be given that any of the events anticipated by the forward looking estimates will -transpire or occur, or if any of them do so, what benefits, including the amounts of proceeds, that Orca will derive therefrom. This presentation should be read in conjunction with the company s unaudited financial statements for the three months ended 31 March 2007 and the audited financial statements and the related notes for the year ended 31 December Page 2

3 Orca background Focus Expanding Tanzania gas production Targeting oil exploration projects in sub Saharan Africa Listing TSXV ORC.B (Cdn$13.9/share) Shares out 27.1 million Market capitalisation Cdn$376 million Reserves 415 BCF (2P) Production 13 mmscfd (Additional Gas, 2006) Shares in issue 27.1 million Principal shareholders David Lyons: 24.6% diluted Trapeze Asset Management: circa 19% The Company was spun out from PanOcean Energy Corporation in August 2004 as EastCoast Energy Corporation. It changed name to Orca Exploration Group Inc in Q The Company is now embarking on an aggressive acquisition programme with the same business development and exploration team that was pivotal to the success of PanOcean before it s sale to Addax in September 2006 for US$1.4 billion Page 3

4 Tanzanian operations Vertically integrated gas company Has rights to Songo Songo reserves Operates upstream and downstream Orca operations Songo Songo project Gas wells with 160 mmscfd capacity 70 mmscfd gas processing facility 230 km pipeline $280 mm World Bank funded project Implementing plans to double production Implementing strategic expansion to tie in new large power stations. Orca s current position The only large gas supplier in East Africa in an energy market characterised by shortages Orca has established rising production and cash flow during last 3 years from the sale of Additional Gas Page 4

5 Allocation of the Songo Songo reserves Industries/CNG Orca Exploration $ Additional Gas for 5 power stations Additional Gas Reserves Additional Gas Production Sharing Agreement Additional Gas for UGT-6 Songas Power Tanesco $ Wazo Hill cement plant Protected Gas Reserves Protected Gas TPDC Protected Gas for UGT 1-5 Orca is the owner of: Additional Gas Reserves (rights via PSA) Downstream gas distribution system Orca is the operator of: The gas field and gas processing plant Downstream gas distribution system Page 5

6 Songo Songo reserves growth for last three years 450 Increased Additional Gas 2P recoverable reserves by 63% to 415 Bcf Probable Proven Gross licensed Additional Gas reserves growth 947 kilometers of new seismic (including transition zone) over the main field and exploration acreage Songo Songo West prospect was identified 2km west of Songo Songo Bcf Page 6

7 Production capacity growth Increased capacity of well SS-9 by 30 mmscfd SSW-N SSW-S Songo Songo North Songo Songo Currently drilling SS-10, a 1 kilometre deviated development well Plan to drill Songo Songo North During Potential 100 bcf from 3P to 1P SS-10 Plan to drill Songo Songo West During Potential 600 bcf GIP SS-9 Discovery Blocks Potential drilling locations Existing wells 9 Page 7

8 Production operations since spin out SS-7 SS-5 SS-9 SS-10 SS-4 SS-3 Produced 37 bcf of gas (including Protected Gas) from the field by end 2006 Operated the wells, flowlines and gas processing plant with no disruption to the supply of gas to Dar es Salaam, and no significant incidents Planning for the expansion of the existing gas processing facilities from a capacity of 70 mmscfd to 140 mmscfd Page 8

9 Downstream expansion since spin out Constructed two Pressure Reduction Stations and 34 kilometers of low pressure pipeline to distribute gas in Dar es Salaam Connected 17 industrial customers Connected 6 gas fired power stations with a generation capacity of 310 MWs Aggreko Plant 48 MW UGT-6 Generation: 42 MW Dowans B Plant: 20 MW Page 9

10 Use of funds to expand production Two rights issues (March 05 and December 06) raising gross proceeds of Cdn$5.5 million and Cdn$21.5 million respectively Funds primarily utilised on remedial work on SS-9, the current drilling of SS-10, the low pressure distribution system and industrial and power connections Year on year growth in sales volumes from a zero base in ,000 5,000 4,000 Industrial Power Sales volume growth 2005 to 2006 Mmscf. 3,000 2,000 1, Page 10

11 Financial growth since spin out Year on year revenue growth from a zero base in 2004 Further enhanced by current high energy prices 16,000 14,000 12,000 Revenue growth 2005 to ,000 US$000 8,000 6,000 4,000 2, Page 11

12 Financial and operating highlights US$000 except where otherwise stated Change Revenue 13,828 5, % Profit before taxation 4, % Profit per share diluted (US$) % Funds from operations 6,030 2, % Funds per share from operations (US$) % Working capital 20,430 2, % Shareholders equity 37,889 16, % Class A & B shares ( 000) 26,774 23,264 15% Options ( 000) 2,022 1,987 2% Additional Gas sold industrial (mmscf) 1, % Additional Gas sold power (mmscf) 3,371 1, % Average price per mcf industrial (US$) % Average price per mcf power (US$) % Proved plus probable (bcf) % Proved plus probable present value at 10% (US$ million) % Page 12

13 Growth of the markets in Tanzania mmscfd Power sales Industrial sales CNG McDaniel s 2P 2006 forecast These markets can be serviced from the existing reserve base These markets are tangible and are located in Dar es Salaam This level of sales should generate cash flows in excess of US$50 million in 2009 Page 13

14 Gas powered generation being installed in 2007 Dowans A: 3 x GE TM 2500 Dowans A: GE LM 6000 Wärtsilä MW 15 mmscfd (max) 40 MW 10 mmscfd (max) 100 MW 19 mmscfd (max) 310 MWs of Additional Gas fired generation will be operational by the end of 2007 Aggreko 48 MW UGT 6 42 MW Dowans 120 MW Wärtsilä 100 MW The maximum gas consumption of this generation is estimated at 68 mmscfd Page 14

15 Gas generation installed/converted in Two permanent power plants are due to be commissioned during 2008/2009 The IPTL 100 MW thermal plant is due to be converted (from burning heavy fuel oil) starting in Q (23 mmscfd max once fully converted) An additional 45 MW Wärtsilä plant is due to be installed in the second half of 2008 (next to the IPTL plant, 9 mmscfd max) It is likely that some (but probably not all) of the 168 MWs of emergency plants will be decommissioned in Q4 2008/Q build up of gas fired generation Indicative maximum gas volumes MWs IPTL 100 MW Wartsila 45 MW Dowans 40 MW Wartsila 100 MW Dowans 60 MW Dowans 20 MW Aggreko 48 MW Ubungo 42 MW MW Mmscf/d IPTL 100 MW Wartsila 45 MW Dowans 40 MW Wartsila 100 MW Dowans 60 MW Dowans 20 MW Aggreko 48 MW Ubungo 42 MW mmscfd Dec- 06 Q Q Q Q Q Q Q Q Q Q Q Q Dec-06 Q Q Q Q Q Q Q Q Q Q Q Q Page 15

16 Downstream gas distribution Ringmain Wazo Hill Kiln 4 Tegeta PRS Pressure Reduction Stations (PRS) AG Customers connected Tegeta 45 MW Next AG Industrial Customers 178 MW leased EPPs Aggreko 48 MW Dowans =120 MW Wärtsilä 100 MW 16 line 8 line Murzha 3 Mukwano Yuasa Battery UGT-6 IPTL 100 MW Mwenge area Chinese Textile mills Nida Textile Tanzania Breweries METL Bora Alaf Kioo Glass Plasco Insign paint Power Generation stations Expansion Existing Ringmain Ringmain Expansion Two more Ringmain expansions More customer tie-ins 5 mmscfd to Wazo Hill from 2009 Namera Ringmain loop Murzha 1&2 Lakhani Azam Pepsi Metro Airport Area Associated Breweries Serengeti Karibu Textile PRS Page 16

17 Compressed Natural Gas potential CNG to customers away from pipelines: Tanzania customers can pay up to $15/mmbtu LPG displacement On-site power generation, heating, air conditioning Large hotels and similar sized customers Currently in planning stages, using existing technology CNG for vehicles Conversion of vehicles in Dar region Pilot operation being developed in Dar Page 17

18 Market expansion options Arusha to Nairobi Interconnector Nairobi Seven Forks Approx 200 km Kenya Existing 220 kv line Proposed 220 kv line 132 kv line Gas pipeline Hydroelectric Plant, Gas Markets Infrastructure Arusha Border Additional markets that could be supplied with capital and additional reserves Mombasa Tanga in Tanzania; and Mombasa in Kenya 400 kilometre pipeline Market of approximately mmscfd Singida Tanzania Trunkline to Morogoro Morogoro Tanga Trunklines to Tanga / Mombasa Zanzibar Dar Export of power to Kenya Kenya has in excess of 440 MWs of generation using heavy fuel oil or similar (equivalent to 88 mmscfd) Demand for electricity is estimated to be increasing at 150 MWs per annum (the equivalent of 30 mmscfd) Interconnector between Arusha in Tanzania and Nairobi is nearing commitment Transporting gas by pipeline or CNG SSI Morogoro and Industrial centres Page 18

19 Meeting the near-term market Near-term power market can be met by developed Songo Songo gas 200 mmscfd SS-9 SS-7 SS-5 SS-4 Fourth Train Third Train 2 Trains Existing Capacity Future compression Existing nameplate capacity Wärtsilä 100 MW Tegeta 45 MW Dowans 140 MW IPTL 100 MW Aggreko 40 MW Industrial Ubungo 6 42 MW Protected Gas 0 SS-3 Wells SSI Facilities Pipeline Gas Markets at 100% Load Page 19

20 Ability to deliver exploration success PanOcean s successful exploration and new venture team are now working for Orca PanOcean s growth and 2,800% increase in market capitalisation between Jan 2001 to Sept 2006 was predominantly founded on: Two low entry cost Gabonese farm ins Awoun Etame Drilling success All 5 exploration wells drilled in 2004 were discoveries Block Field McDaniel Reserves (Net) Mmbbl Sales value on per bbl basis $ million Etame Etame Avouma Ebouri Awoun Koula Damier Maghena Tsiengui Panthere Obangue Remboué Total ,400 * Equates to $20.7/bbl Page 20

21 PanOcean Energy Awoun example Before POE farmin After POE farmin Awoun POE farmin for 50% expl equity POE paid $8 mm carried costs for 1 st & 2 nd well 2 for 1 deal. Competition high Technical prospectivity already defined Nearby to known fields and infrastructure Probable extension of field into Awoun Previously, 9 dry holes drilled on block >1,000 sqkm Awoun 2 discoveries from 4 wells 1st & 2nd wells were a discovery (Koula & Damier) Tsiengui extension proven into Awoun Promote costs: $4 mm Total exploration drilling expenditure at 50%: $12 mm Total Gross E&A costs up to sale: $52mm Page 21

22 Growth opportunities in sub Saharan Africa Targeting to farm in to two new opportunities by the end of 2007 Predominantly sub Saharan Africa focussed, but not exclusively so Oil targets to balance the Tanzanian gas asset Core focus Defined as exploration near to infrastructure, drillable within months Block may have existing discoveries that are/were considered marginal Medium entry cost (circa $10 - $15 million), but with low exploration risk (1 in 2 to 1 in 3) Immediate/near term production Higher risk, higher reward exploration Low entry cost Proven oil basin, but relatively immature Manageable risk (could farm out later) Significant exploration upside (>100 mmbbl) Initial drilling within months Page 22

23 Orca Executive Board (all formerly PanOcean) Chairman (non-executive): David Lyons Former Chairman and CEO of PanOcean Energy Oil and gas executive management of PanAfrican, Ocelot CEO: Peter Clutterbuck. Former VP Operations of PanOcean Energy Former 15 year career BP Group in management positions VP and CFO: Nigel Friend Formerly with PanOcean Energy (Commercial / Financial) before spin-off Chartered Accountant with KPMG Director of Exploration: James Smith Formerly VP Exploration of PanOcean Energy Formerly Manager New Ventures for Chevron Page 23

24 Targets for the next 6-12 months Farm-in to two high potential oil properties Finalise and sign long term gas supply contracts for 287 MWs of power generation: IPTL 100 MW, Wärtsilä 100 MW, Wärtsilä/Tegeta 45 MW and UGT 6 42 MW Expand sales to the industrial market to 9 mmscfd Increase the deliverability of the field to 210 mmscfd through the completion of SS-10 Finalise drilling plans for the Songo Songo West exploration well and the Songo Songo North appraisal well Commence sales of Compressed Natural Gas (CNG) Page 24

25 Reserves and resources potential SS North accumulation: Undeveloped GIP >0.2 tcf Gas presence established by SS1 SS West exploration prospect Low risk Prospective resources bcf Songo Songo main field Developed GIP: tcf SW SS West SW prospect Songo Songo Field SS1 NE 250 msec 1km Page 26

26 Additional Gas Remaining Reserves Gross Property, end of licence basis (bcf) End 2005 End 2006 Changes Produced (AG and PG) bcf production Proved Producing bcf Proved Undeveloped bcf Total Proved bcf Probable bcf Proved + Probable bcf Net Orca, end of license basis (bcf) End 2005 End 2006 Changes Proved Producing bcf Proved Undeveloped bcf Total Proved bcf Probable bcf Proved + Probable bcf Note: Protected Gas = 233 bcf (2005: 249 bcf): assuming load 81% flat (2005 assumed : 88% declining to 80.4% [2010], thereafter flat at 80.4%) Page 27

27 Songo Songo PSA terms 2006 break down of operating revenue Revenues from gas sales US$ TPDC Profit Gas Pipeline tariff Less Orca Profit Gas Tariff for the use of the gas processing plant and pipeline (17.5% of the sales price as it exits the pipeline) Orca Cost Gas = Net Revenues Orca Cost Gas = Up to 75% of Net Revenues Orca Profit Gas = Between 25% and 55% for existing production from five wells (depends on sales volumes) Between 10% and 46% for new production wells where TPDC has elected to back in Less Additional Profits Tax = If returns are in excess of 25% plus USPPI per annum, APT is payable up to 55% of Orca Profit Gas if a 35% plus USPPI return per annum TPDC Cost Gas = Proportionate share of 75% of Net Revenues where elected to back in TPDC Profit Gas = Between 75% and 45% for existing production from five wells (depends on sales volumes) Between 90% and 54% for new production wells where TPDC has elected to back in APT Page 28