Tanzania: Orca Exploration’s SS-11 Well Comes on Stream

Orca Exploration Group Inc. and its operating subsidiary PanAfrican Energy Tanzania Limited jointly announce that its new SS-11 well is onstream which is expected to maintain and strengthen reliability of gas production from Tanzania’s Songo Songo gas field.

The new production well SS-11, completed at Songo Songo Island in June 2012, was flowline connected to the on-island gas processing plant and successfully brought onstream 3 October 2012. SS-11 is currently producing approximately 30 million cubic feet per day (“MMcfd”) of natural gas.

Announcing this development, Orca Chairman and Chief Executive Officer W. David Lyons stated, “We congratulate our team in Tanzania for bringing this well onstream to ensure sustained gas production capacity. We also congratulate our local Tanzanian contractors on this project. They supplied 100% local content for this installation and construction project. The installation involved developing an innovative solution to a unique engineering challenge which was met by local construction of a complex barge to lay the pipeline. We delivered the project on budget and in roughly one-third of the time.”

With SS-11 now onstream Orca has taken the SS-9 well off production and suspended it as planned. It is anticipated that production from the new SS-11 well can be increased to over 40 MMcfd with the planned debottlenecking of the gas gathering infrastructure expected to be completed over the next few months.

The SS-9 well, which was producing approximately 30 MMscf/d, has been permanently suspended due to a tubing leak resulting in rising casing annulus pressures. To ensure sustainable production levels, the Company is also reviewing the integrity of the SS-3 and SS-4 wells which are currently producing a total of approximately 18 MMcfd. Orca’s current view is that to ensure continued safe operations, SS-3 will need to be suspended immediately and, depending on the results of the tests, SS-4 may need to be suspended over the next number of weeks. The Company plans to make up the production shortfall with additional volumes from SS-10 and SS-11. As a result no material change in field production levels of approximately 101 MMscf/d is currently anticipated. There will be, however, no redundant capacity in the facility or pipeline until additional wells can be drilled in the field and facilities expanded.

The SS-9, SS-3 and SS-4 wells were drilled by the Tanzanian Petroleum Development Corporation (“TPDC”) between 1976 and 1983 and have reached the end of their useful life. The SS-10 well was drilled by the Company in 2007. Plans for an additional development well, SS-12, were placed on hold until the re-negotiation of certain terms of the Songo Songo Production Sharing Agreement and related issues arising from the Government Negotiating Committee discussions have been fully resolved as well as the significant outstanding TANESCO receivable having been paid.

With the tie-in of SS-11, PanAfrican Energy has achieved a number of important milestones in Tanzania, including the first offshore heavy lift achieved in East Africa and the first shallow water application of Technip’s technically advanced Coflexip pipe in East Africa.

Officer appointment

The Company also wishes to announce the appointment of David K. Roberts as Vice President Operations and Country Manager. Mr. Roberts has a BSc in Petroleum Engineering from the Colorado School of Mines and has over 20 years experience in international oil & gas production and drilling operations. His early career was spent with Perenco where he progressed from Field Engineer to Engineering & Operations Manager. From 1999 to 2006, Mr. Roberts assumed increasing operating responsibilities at Orca’s predecessor company in Gabon, Pan-Ocean Energy Ltd., ultimately as General Manager, where was instrumental in managing that company’s growth from 400 barrels of oil per day (“bpd”) to 20,000 bpd. Mr. Roberts will be based in Dar es Salaam and replaces Andrew Brown as Country Manager.

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Press Release, October 23, 2012