Orca Exploration Group Inc. (Orca or the Company) reported Monday that it is proceeding with the first phase of the Songo Songo development program offshore Tanzania following World Bank board approval of the International Finance Corporation (IFC) financing.
IFC has received approval by the board of World Bank for an investment by IFC of up to $60 million in the Company's operating subsidiary, PanAfrican Energy Tanzania Limited. The investment is currently contemplated as a subordinated, income participating loan with flexible repayment terms and a maximum tenor of approximately 10 years. Completion of the IFC financing is subject to final agreement of specific terms and the negotiation and signing of definitive documentation. Initial drawdown of the facility will be subject to a number of terms and conditions, including satisfaction by IFC of the sustained payment performance of the Tanzania state utility, TANESCO, in respect of ongoing gas deliveries by the Company.
Subsequent to the approval of the IFC financing, the Company entered into a drilling contract with Paragon Offshore plc for the use of its Mobile Drilling Workover Jackup M826 (250' ILC), as well the provision of associated services, in order to execute the offshore phase of the development program for the Songo Songo gas field. The Paragon M826 Mobile Drilling Workover Jackup was selected to operate in the somewhat unique shallow water operating environment around Songo Songo Island. The Company still needs to obtain certain regulatory and contractual approvals related to certain aspects of the development program.
The drilling contract provides for a commencement date between Aug. 1 and Sept. 21, with the exact date being the date the drilling rig arrives at the Company's first well location in Songo Songo. The contract carries a minimum duration of 90 days and a minimum financial commitment of $21 million excluding withholding tax. The Company's commitments under the drilling contract are not subject to completion of the IFC financing or funding of such financing.
The Company currently anticipates operations commencing by September. The operations are planned to include workovers (being the removal and replacement of production tubing strings) on three existing wells (SS‑5, SS-7 and SS-9) and the drilling of one new well (SS-J). The Company also retains the option to drill a further two wells, subject to the success of the workovers.
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