Orca Exploration Announces Completion of its Q3 2019 Interim Filings
TORTOLA, British Virgin Islands, Nov. 18, 2019 (GLOBE NEWSWIRE) — Orca Exploration Group Inc. (“Orca” or the “Company“) (TSXV: ORC.A and ORC.B) 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, 2019 with the Canadian securities regulatory authorities.
During Q3 2019 the Company completed the installation of the refrigeration unit for the Songas processing and transportation facilities (“Songas Infrastructure”). The refrigeration unit is operational and has enabled the Company to increase the volumes that can be processed and transported to Dar es Salaam through the Songas Infrastructure to 100 million standard cubic feet per day (“MMcfd”). This is in addition to the volumes delivered through the National Natural Gas Infrastructure (“NNGI”) under the long-term gas sales agreement (“LTGSA”) signed in May 2019 with the Tanzanian Petroleum Development Corporation (“TPDC”). The LTGSA was amended in September 2019 to increase the volumes to be supplied through the NNGI from the initially agreed 20 MMcfd up to a maximum daily quantity of 30 MMcfd.The Company’s revenue for the quarter increased by 42% to $21.5 million from $15.1 million in Q3 2018 and increased 41% to $62.4 million over the nine months ended September 30, 2019 compared to $44.3 million for the comparable prior year period. The increase for the quarter and year-to-date amounts is primarily a consequence of higher revenues from sales to the Tanzanian Electric Supply Company (“TANESCO”), a greater percentage of profit share and a positive current income tax adjustment as a consequence of recording a profit in the periods. Gas deliveries averaged 63.4 MMcfd, an increase of 45% over 43.6 MMcfd in Q3 2018 and increased 58% to 60.5 MMcfd for the nine months ended September 30, 2019 compared to 38.3 MMcfd for the comparable prior year period. The increase in gas volumes delivered is primarily the result of increased nominations of gas volumes by the TANESCO and by TPDC through the NNGI. The increase in volumes was partially offset by a 12% decrease in the weighted average price for Q3 2019 to $4.52/million cubic feet (“mcf”) from $5.12/mcf in Q3 2018 and by a 15% decrease in the weighted average price in the nine months ending September 30, 2019 to $4.44/mcf from $5.21/mcf for the comparable prior year period.The Company recorded net income attributable to shareholders of $2.6 million for the quarter ($0.07 per share diluted) compared to net income attributable to shareholders of $2.6 million in Q3 2018 ($0.07 per share diluted) and $12.4 million of net income attributable to shareholders for the nine months ended September 30, 2019 compared to net income attributable to shareholders of $10.5 million for the comparable prior year period. The increase for the nine months ended September 30, 2019 was primarily a consequence of increased volumes and revenue, a reduction in stock based compensation expense and a decrease in finance expense partially offset by an increase in depletion expense, a decrease in finance income and an increase in Additional Profit Tax between periods.Net cash flows from operating activities for the quarter ended September 30, 2019 decreased by 28% to $7.6 million compared to $10.5 million in Q3 2018 and increased by 20% for the nine months ended September 30, 2019 to $29.7 million from $24.7 million for the comparable prior year period. The decrease in the quarter is a consequence of the decrease in trade and other payables. The increase in the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018 is mainly due to an increase in revenue between periods and a decrease in stock based compensation.Adjusted funds flow from operations (1) for the quarter increased by 98% to $10.2 million from $5.1 million in Q3 2018 and increased by 131% to $29.7 million for the nine months ended September 30, 2019 compared to $12.9 million for the nine months ended September 30, 2018. The increase for the quarter and for the nine months ended September 30, 2019 from the comparable prior year periods is primarily a result of increased sales volumes and revenue.Working capital increased 11% to $93.3 million compared to $84.2 million as at December 31, 2018. The increase is primarily the result of the continued collection of TANESCO long-term arrears and the decrease in liabilities associated with the TPDC Profit Gas entitlement. The combined total of cash and investment in short-term bonds at September 30, 2019 was $142.7 million (December 31, 2018: $131.5 million), an increase of 9%. The Company’s intention is to hold the bond investments to maturity.At September 30, 2019 the current receivable from TANESCO was $ nil (December 31, 2018: $ nil). The TANESCO long-term trade receivable at September 30, 2019 was $55.0 million with a provision of $55.0 million compared to $58.5 million (with a provision of $58.5 million) at December 31, 2018. Subsequent to September 30, 2019 the Company has invoiced TANESCO $2.9 million for October 2019 gas deliveries and TANESCO has paid the Company $7.6 million.On July 25, 2019 the Company announced that a special committee of independent directors (the “Special Committee”) had been constituted to review strategic alternatives that might be available to the Company to maximize shareholder value. On September 5, 2019 the Company announced the appointment of RBC Capital Markets to review strategic alternatives for the Company under the direction of the Special Committee.On September 17, 2019 the Company declared a dividend of CDN$0.06 per share on each of its Class A voting shares and Class B subordinate voting shares (“Class B Shares“) for a total of $1.6 million the holders of record as of September 30, 2019 and paid prior to October 31, 2019.On October 18, 2019 the Company announced it completed its normal course issuer bid (the “NCIB”) for the purchase of its Class B Shares. Under the NCIB the Company repurchased 933,028 Class B Shares at a weighted average price of CDN$6.43 per Class B Share for aggregate consideration of approximately CDN$6.0 million being the maximum aggregate consideration authorized under the NCIB. The Class B Shares repurchased under the NCIB have been or will be cancelled.(1) Adjusted funds flow from operations is a non-GAAP financial measure which may not be comparable to other companies. Please refer to non-GAAP financial measures below.
Q3 2019 Financial and Operating Highlights
(all amounts are in United States Dollars (“$”) unless otherwise indicated)(1) Adjusted funds flow from operations and operating netback are non-GAAP financial measures which may not be comparable to other companies. Please refer to non-GAAP financial measures below. Certain prior year amounts for adjusted funds flow from operations have been reclassified to conform with the current year presentation.
The complete condensed consolidated unaudited interim financial statements and MD&A for the three and nine month periods ending September 30, 2019 may be found on the Company’s website www.orcaexploration.com or on the Company’s profile on SEDAR at www.sedar.com.
Orca Exploration Group Inc.Orca Exploration Group Inc. is an international public company engaged in natural gas exploration, development and supply in Tanzania through its subsidiary PanAfrican Energy Tanzania Limited. Orca trades on the TSX Venture Exchange under the trading symbols ORC.B and ORC.A.For further information please contact:Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.Non-GAAP Financial MeasuresThe Company discloses several financial measures herein that do not have any standardized meaning prescribed under International Financial Reporting Standards (“IFRS“). These financial measures include funds flow from operating activities, funds flow per share, and operating netbacks. See the Company’s MD&A for the three and nine months ended September 30, 2019 available on the Company’s website www.orcaexploration.com or on the Company’s profile on www.sedar.com for a reconciliation of these non-GAAP financial measures to their most comparable GAAP measures.